The conceptual basis of strategic HRM

The conceptual basis of strategic HRM

The conceptual basis of strategic HRM

The conceptual basis of strategic HRM. Strategic HRM takes the notion of HRM as a strategic, integrated and coherent process and associates it with an approach to management that involves adopting a broad and long-term view of where the business is going and managing it in ways that ensure that this strategic thrust is maintained. It is influenced by the concepts of strategic management and strategy.

Strategic management

According to Boxall and Purcell (2003): ‘Strategic management is best defined as a process. It is a process of strategy making, of forming and, if the firm survives, reforming its strategy over time.’

Strategic management was described by Johnson et al (2005: 6) as ‘understanding the strategic position of an organization, making strategic choices for the future, and turning strategy into action’.

The purpose of strategic management has been expressed by Kanter (1984: 288) as being to ‘elicit the present actions for the future’ and become ‘action vehicles – integrating and institutionalizing mechanisms for change’

The key strategic management activity identified by Thompson and Strickland (1996: 3) is ‘deciding what business the company will be in and forming a strategic vision of where the organization needs to be headed – in effect, infusing the organization with a sense of purpose, providing long-term direction, and establishing a clear mission to be accomplished.’

The focus is on identifying the organization’s mission and strategies, but attention is also given to the resource base required to make it succeed. Managers who think strategically will have a broad and long-term view of where they are going.

But they will also be aware that they are responsible, first, for planning how to allocate resources to opportunities that contribute to the implementation of strategy, and second, for managing these opportunities in ways that will add value to the results achieved by the firm.

The concept of strategy

Strategy is the approach selected to achieve specified goals in the future. As defined by Chandler (1962: 13) it is: ‘The determination of the long-term goals and objectives of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out those goals.

The formulation and implementation of corporate strategy is a process for developing a sense of direction, making the best use of resources and ensuring strategic fit.

Strategy has three fundamental characteristics : 

First, it is forward looking. It is about deciding where you want to go and how you mean to get there. It is concerned with both ends and means. In this sense a strategy is a declaration of intent:
‘This is what we want to do and this is how we intend to do it.’

Strategies define longer-term goals but they also cover how those goals will be attained. They guide purposeful action to deliver the required result.

Second, the recognition that the organizational capability of a firm (its capacity to function effectively) depends on its resource capability (the quality and quantity of its resources and their potential to deliver results).

Third, it aims to achieve strategic fit – the need when developing functional strategies such as HR to achieve congruence between them and the organization’s business strategies within the context of its external and internal environment.

Implementation of strategy

‘Implementation entails converting the strategic plan into action and then into results’. Kanter noted that: ‘Many companies, even very sophisticated ones, are much better at generating impressive plans on paper than they are at getting “ownership” of the plans so that they actually guide operational decisions.’

Critical evaluation of the concept of strategy

The development of corporate strategy is often assumed to be a logical, step-by-step affair, the outcome of which is a formal written statement that provides a definitive guide to the organization’s intentions.

Many people still believe and act as if this were the case, but it is a misrepresentation of reality. In practice, the formulation of strategy may not be as rational and linear a process as some writers describe it or as some managers attempt to make it.

There are limitations to the totally logical model of management that underpins the concept of strategic human resource management

Sparrow et al (2010: 4) asserted succinctly that: ‘Strategy is not rational and never has been.’ Strategy formulation can best be described as ‘problem solving in unstructured situations’

Quinn (1980: 9) stated that a strategy may simply be ‘a widely held understanding resulting from a stream of decisions’.
He believed that strategy formulation takes place by means of ‘logical incrementalism’, ie it evolves in several steps rather than being conceived as a whole.

Another difficulty is that strategies are often based on the questionable assumption that the future will resemble the past.
Some years ago, Heller (1972: 150) had a go at the cult of long-range planning: ‘What goes wrong’ he wrote, ‘is that sensible anticipation gets converted into foolish numbers: and their validity always hinges on large loose assumptions.’

Strategy formulation is not necessarily a deterministic, rational and continuous process, as was emphasized by Mintzberg, He noted that, rather than being consciously and systematically developed, strategy reorientation happens in what he calls brief ‘quantum loops’. A strategy, according to Mintzberg, can be deliberate – it can realize the intentions of senior management

for example to attack and conquer a new market. But this is not always the case.

Boxall and Purcell (2003) suggested that ‘it is better if we understand the strategies of firms as sets of strategic choices some of which may stem from planning exercises and set-piece debates in senior management, and some of which may emerge in a stream of action’.

The nature of strategic HRM

Strategic HRM is an approach that defines how the organization’s goals will be achieved through people by means of HR strategies and integrated HR policies and practices.

It was defined by Mabey et al (1998) as the process of ‘developing corporate capability to deliver new organizational strategies’. It is based on two key ideas, namely the resource-based view and the need for strategic fit

SHRM can be regarded as a mindset underpinned by certain concepts rather than a set of techniques. It provides the foundation for strategic reviews in which analyses of the organizational context and existing HR practices lead to decisions on strategic plans for the development of overall or specific HR strategies.

SHRM involves the exercise of strategic choice (which is always there) and the establishment of strategic priorities. It is essentially about the integration of business and HR strategies so that the latter contribute to the achievement of the former.

Strategic HRM is not just about strategic planning, nor does it only deal with the formulation of individual HR strategies. Its main concern is with integrating what HR does and plans to do with what the business does and plans to do

The fundamental aim of strategic HRM is to generate organizational capability by ensuring that the organization has the skilled, engaged, committed and well-motivated employees it needs to achieve sustained competitive advantage.

SHRM has three main objectives:

  1. achieve integration – the vertical alignment of HR strategies with business strategies and the horizontal integration of HR strategies.
  2. objective is to provide a sense of direction in an often turbulent environment so that the business needs of the organization and the individual and the collective needs of its employees can be met by the development and implementation of coherent and practical HR policies and programmes.
  3. objective is to contribute to the formulation of business strategy by drawing attention to ways in which the business can capitalize on the advantages provided by the strengths of its human resources.

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