Human resources management has been undergoing a shift for the past several decades that is meant to instill a system that is more consistent with the departments actual role in the business. "Strategic HRM began to emerge approximately twenty-five years ago, and since then it has evolved to include several streams of theory and empirical investigations" (Schuler & Jackson, 2005). These theoretical variants have all proposed that HRM is not the same as it was when the practice was developed more than a century ago. Although upper management is content to use the HR department in the same way that they always have, this does not utilize it in such a way as it can be to help the company grow.
The practice has undergone a pretty thorough vetting among the research community because of its seeming efficacy in relation to the overall business model. "HRM researchers are attracted to [strategic HRM] because it provides a strong foundation for mounting a successful challenge to the popular charge that theirs is a discipline in search of a theory" (Niehuas & Swiercz, 1995). These researchers have tried to determine a consistent thread among the many different studies and the methods current HR departments use. Most research into this area has concluded that
"it is & #8230; possible to recognize a logical and aesthetically consistent relationship between the seemingly endless array of approaches to the study of strategic HRM" (Niehaus & Swiercz, 1995), and that is the basic thrust of this critical analysis of the practice of strategic HRM. This paper looks at what strategic HRM is according to the research, and how it relates to business planning, employee relations, and rewards for both individual employees and the business itself.
What it SHRM?
Some businesses have been integrating strategic HRM into their overall business plan for many years, but there is a segment that does not believe that strategic HRM is necessary. Some "Line managers and chief executive officers have been found to have a preference for personnel departments that deliver maintenance service, instead of strategic management activities" (Teo & Crawford, 2005). The reason that this seems to be so is because managers do not like change. It does not matter that it may be beneficial to the company, it matters that the manager, especially the line managers reserve the influence for themselves. Unfortunately, this attitude may cripple their companies because they are not full utilizing the HR department. The main problem is that they do not understand what strategic HRM is, so they continue to doubt its usefulness. This leads to a discussion of what strategic HRM actually is.
Multiple definitions have been devised to fully encompass what different people mean by strategic HRM, but a simple explanation is that "Strategic HRM (SHRM) focuses on the strategic choices in organizations and business units with regards to their use of the workforce, and its impact on operational and firm performance" (Intan-Soraya & Chew, 2010). This may seem to be saying that SHRM is engaged in the same duties that HRM always has, but reading into the common shows that this is a broad perspective. HR departments, in the past, have only focused on such duties as hiring employees, paying employees (and this function may be handled by another department), and ensuring that company policy is passed on to those employees. The new model, SHRM, realizes that "many actors are involved in the formulation and implementation of human resource strategies. These stakeholders are internal & #8230; [and] external to the organization, so the degree to which they influence & #8230; human resource policies must be considered" (Alcazar, Fernandez & Gardey, 2005). The authors mean that HR is not just concerned with what happens within the company, as the old model suggests, but the department is intimately involved with what happens externally that affects the company. This makes the function of the department much more complicated, but it also realizes how the human element of the company is central to all operations of the company.
In reality the SHRM theory is derived from the belief that it is "not likely that all duties necessary to perform a job can be identified and put in a job description," and that is also impossible "to monitor and reward employees for all the contributions they make toward accomplishing the firm's strategic objectives" (Tocher & Rutherford, 2009). These two simple statements mean that SHRM research tries to determine how an isolated employee affects the business environment in every possible way. The individual is an employee despite their location. An employee who drinks too much the night before they are to work, influences how productive they will be the next day. So, SHRM takes into account this aspect of the employee's life also. This is not to say that the practice is so micromanaging that every minute of the person's life is governed by the company they work for, but it does mean that HRM strategies should take into account what an employee does after they leave work and other factors of the person's life. To that end, "examples of strategic HRM practices include but are not limited to employee empowerment programs, incentive compensation plans, involving employees in organizational decision making, and total quality management initiatives" (Tocher & Rutherford, 2009). These programs are meant to engage the employee in the company and help them remain cognizant of the effect that they can have on the production of the business they work for. As Bhatnagar, Puri and Jha (2004) suggest "an innovative strategic HRM intervention & #8230; leads to an unlearning of the past culture and to a relearning of the new performance oriented culture."
Within SHRM research, there are two dominant "schools." "The "best practice" school & #8230; [and] the "best fit" school" (Vandenabeele & Hondaghem, 2008). These methods are exactly what they sound like as "The best practice school states there is only one best mix of HRM instruments" whereas "The best fit approach & #8230; states that it is necessary to have a horizontal & #8230; fit & #8230; [and a] vertical fit, an integration of the HRM practices with the general business strategies" (Vandenabeele & Hondaghem, 2008). However, most researchers believe that it is actually a confluence of the two that will produce what the HR department wants from its strategies. The mix of best practice and best fit strategies "should yield optimal results, the theory goes, and those results are highly performing work systems that enable the organization to do its job as well as possible" (Vandenabeele & Hondaghem, 2008).
To better understand the distinction between the two strategies it is necessary to see how they differ according to actual implemented plans, and why these two schools work best together. Cunningham and Kempling (2011) suggest that "a model of strategic HRM that promotes "fit" would start with a definition of the organization's vision, mission, and strategies, and an examination of internal resources, (strengths and weaknesses) and external developments (opportunities and threats)."
SHRM is a complicated rethinking of the old HRM paradigm, and the new research contains even more levels that must be incorporated to understand the breadth of the process. Kim and Hong, in their research, say that
"a strategic HRM system & #8230; should build on the best attributes of & #8230; three models: traditional public administration ... principles of impartiality and merit; new public management ... performance management and professionalism; and the governance paradigm ... more responsive to the demands of citizens and other stakeholders."
These aspects of SHRM policy are not included in the old paradigm. New human resource departments, and especially the leaders of those departments, need to understand the expanding view that is being expected of them, but it is not just the HR department that has to change its thinking. "This reconsideration of the nature of HRM also influences the position of this function within the organization & #8230; HRM is no longer an exclusive responsibility of personnel managers, but also of other managers, especially line directors" (Alcazar, Fernandez & Gardey, 2005). Every member of management in the company must understand what the new function of HR is. People become stuck in their notion of what a specific department is, or what it can do. Because HR has a much greater scope than previously believed, all levels of management have to accept the new scope for the change to be effective.
One of these new functions, as related in contextual models of SHRM, is that "an expansion of the concept of HRM [needs] to encompass factors that have been traditionally underestimated, such as a firm's relationships with Public Administration and Unions, and other social and institutional determinants" (Alcazar, Fernandez & Gardey, 2005). This external function has long been handled by other departments within a company, SHRM suggests that planning as relates to these business functions should include HR in the planning because they relate integrally with employees.
Another issue that has been pursued in the SHRM research…