STRATEGIC HRM DEFINED

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.

Other definitions of strategic HRM include:

1. ‘Strategic HRM is concerned with ‘seeing the people of the organization as a
strategic resource for the achievement of competitive advantage’ (Hendry and
Pettigrew, 1986).

2. ‘A set of processes and activities jointly shared by human resources and line
managers to solve people-related business problems’ (Schuler and Walker, 1990).

3. ‘The macro-organizational approach to viewing the role and function of HRM in the
larger organization’ (Butler et al, 1991).

4. ‘The pattern of planned human resource deployments and activities intended to

enable an organization to achieve its goals’ (Wright and McMahan, 1992).

5. ‘Strategic HRM focuses on actions that differentiate the firm from its competitors’
(Purcell, 1999).

6. ‘The central premise of strategic human resource management theory is that

successful organizational performance depends on a close fit or alignment between
business and human resource strategy’ (Batt, 2007).

BASIS OF STRATEGIC HRM

Strategic HRM is based on three propositions:
1. The human resources or human capital of an organization play a strategic role in its
success and are a major source of competitive advantage.
2. HR strategies should be integrated with business plans (vertical integration). As
Allen and White (2007) stress, ‘The central premise of strategic human resource
management theory is that successful organizational performance depends on a
close fit or alignment between business and human resource strategy.’ Boxall et al
(2007) also believe that ‘The major focus of strategic HRM should be aligning HR
with firm strategies.’
3. Individual HR strategies should cohere by being linked to each other to provide
mutual support (horizontal integration). Strategic HRM 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 analysis of the organizational context and
existing HR practices leads to choices on strategic plans for the development of
 overall or specific HR strategies (see Chapter 4). But strategic HRM is not just about
strategic planning; it is also concerned with the implementation of strategy and the
strategic behaviour of HR specialists working with their line management colleagues
on an everyday basis to ensure that the business goals of the organization are
achieved and its values are put into practice.

PRINCIPLES OF STRATEGIC HRM

Strategic HRM supplies a perspective on the way in which critical issues or success factors
related to people can be addressed and strategic decisions are made that have a major and
long-term impact on the behaviour and success of the organization. It is not just concerned
with ‘mirroring current conditions or past practices’ (Smith, 1982). As a means of
developing integrated HR strategies, strategic HRM is facilitated to the extent to which the
following seven principles set out by Ondrack and Nininger (1984) are followed:

1. There is an overall purpose and the human resource dimensions of that purpose are
evident.
2. A process of developing strategy within the organization exists and is understood,
and there is explicit consideration of human resource dimensions.
3. Effective linkages exist on a continuing basis to ensure the integration of human
resource considerations with the organizational decision-making process.
4. The office of the chief executive provides the challenge for integrating human
resource considerations to meet the needs of the business.
5. The organization of all levels establishes responsibility and accountability for human
resource management.
6. Initiatives in the management of human resources are relevant to the needs of the
business.
7. It includes the responsibility to identify and interact in the social, political,
technological and economic environments in which the organization is and will be
doing business.

AIMS OF STRATEGIC HRM

The fundamental aim of strategic HRM is to generate strategic capability by ensuring that
the organization has the skilled, engaged and well-motivated employees it needs to achieve
sustained competitive advantage. In accordance with the resource-based view as described
later, the strategic goal will be to ‘create firms which are more intelligent and flexible than
their competitors’ (Boxall, 1996) by hiring and developing more talented staff and by
extending their skills base.

Schuler (1992) states that:

Strategic human resource management is largely about integration and adaptation. Its concern is to
ensure that: (1) human resources (HR) management is fully integrated with the strategy and
strategic needs of the firm; (2) HR policies cohere both across policy areas and across hierarchies;
and (3) HR practices are
adjusted, accepted and used by line managers and employees as part of their everyday work.

As Dyer and Holder (1988) remark, strategic HRM provides ‘unifying frameworks which
are at once broad, contingency based and integrative’. The rationale for strategic HRM is
the perceived advantage of having an agreed and understood basis for developing and
implementing approaches to people management that take into account the changing
context in which the firm operates and its longer-term requirements. It has been suggested
by Lengnick-Hall and Lengnick-Hall (1988, 1990) that underlying this rationale in a
business is the concept of achieving competitive advantage through HRM.

When considering the aims of strategic HRM it is necessary to address the issue of the
extent to which HR strategy should take into account ethical considerations – the interests
of all the stakeholders in the organization and employees in general, as well as owners and
management and the responsibilities of the organization to the wider community. In
Storey’s (1989) terms ‘soft strategic HRM’ will place greater emphasis on the human-
relations aspect of people management, stressing continuous development, communication,
involvement, security of employment, the quality of working life and work–life balance.
‘Hard strategic HRM’ on the other hand will emphasize the yield to be obtained by
investing in human resources in the interests of the business. Strategic HRM should attempt
to achieve a proper balance between the hard and soft elements. All organizations exist to
achieve a purpose, and they must ensure that they have the resources required to do so and
that they use them effectively. But they should also take into account the human factors
contained in the concept of soft strategic HRM. In the words of Quinn Mills (1983) they
should plan with people in mind, taking into account the needs and aspirations of all the
members of the organization. The problem is that hard considerations in many businesses
will come first, leaving soft ones some way behind.

Organizations must also consider their responsibilities to society in general on the grounds
that because they draw resources from society they must give back to society. The exercise
of corporate social responsibility, defined by McWilliams, Siegel and Wright (2006) as
‘actions that appear to further some social good beyond the interests of the firm and that
which is required by law’, may be regarded as outside the scope of human resource
management. But because it relates to ethical actions in the interests of people there is a
strong link, and it is therefore an aspect of organizational behavior that can legitimately be
included in the strategic portfolio of HR specialists.