CONTEXT OF

SHRM
Module 2
Introduction
• The evolving role of HR indicates that the it’s the firm’s
workforce that provides the competitive advantage for the
firm. With change in technology and globalization the HR’s
role is shifting from protector and screener to strategic
partner and change agent. Where as the Strategic Human
Resource Management refers to improving business
performance and developing an organizational culture that
supports and encourages the innovation and flexibility by
linking HRM with the strategic goals and objectives of the
firm.
Competing approaches and
Models
COMPETING APPROACHES AND
MODELS

FUNCTIONAL ECONOMIC TYPOLOGICAL

FIT PERSPECTIVE
PERSPECTIVE PERSPECTIVE PERSPECTIVE

To Use HR as Use of 3 distinct HR

Human Resources
Each functional area distinguishable strategies
to be integrated
optimize perfor source of Inducement
with strategic
with respect to competitive Investment
planning
business strategy advantage Involvement
Strategic fit
The HR strategy should be aligned to the business strategy
(vertical fit). Better still, HR strategy should be an integral
part of the business strategy, contributing to the business
planning process as it happens.
• Vertical integration is necessary to provide congruence
between business and human resource strategy so that the
latter supports the accomplishment of the former and,
indeed, helps to define it.
• Horizontal integration with other aspects of the HR strategy
is required so that its different elements fit together. The aim
is to achieve a coherent approach to managing people in
which the various practices are mutually supportive.
Types of strategic fits

BEST FIT APPROACH( STRATEGIC FIT APPROACH):

• Also called external fit or vertical integration with business
strategies.
• HR strategies should match stages of development of firm ie need
for different types of people as well as diverse approaches towards
investment in HUMAN CAPITAL.
• The aim is to achieve a coherent approach to managing people in
which the various practices are mutually supportive.

FIT AS CONTIGENCY( BEST FIT APPROACH) :

• HR approaches to ensure that internal practices of organization
respond to external factors : market, skill availability est.'s per
contingency of situation.
• The unfounded belief that there is a set of best HRM practices and
that adopting them will lead to superior organizational performance
Types of strategic fits
FIT AS AN IDEAL SET OF PRACTICES( BEST PRACTICE APPROACH):
• Identifying any organization as benchmark which has reputation for
excellence and copying its practices.
• The belief that there can be no universal prescriptions for HRM
policies and practices.
• It is all contingent on the organization’s context and culture and its
business strategy – best fit is better than best practise
• FIT AS BUNDLES (BUNDLING APPROACH) :
• Development and implementation of several HR practices together
so that they are interrelated and internally consistent.
• Each HR practice reinforces and complements the other. Also termed
as internal fit or Horizontal integration.
• Bundling is the belief that improved organizational performance will
be achieved by developing inter-related HR practices which, when
they are linked together, will function more effectively by
complementing and supporting one another than if they existed as
separate entities.
Views on SHRM

There are several different views expressed by theoreticians

from time to time. Like
• People are Strategic Resource.
• Planning Process
• Competitive Advantage-
Consolidation of different view
points
• An attempt to consolidate the different viewpoints led us to
develop a typology of the approaches based on the focus of
a particular group of thinkers in SHRM. It presents a
comparative chart of four approaches.
• Strategy-focussed
• Decision-focussed
• Content-focussed
• Implementation-focussed
Summary

• SHRM is a planning process and the resulting plan must be a

long-term plan. Both strategic and functional types of HRM
consider people merely as assets, resource, or capital.
• In contrast, SHRM considers them as strategic human asset,
resource, or capital.
• The main objective of SHRM, which arises as a natural
corollary to the definition of SHRM, is creating and
sustaining competitive advantage for the organization