STRATEGIC HUMAN RESOURCE MANAGEMENT: THREE-STAGE PROCESS AND ...
STRATEGIC HUMAN RESOURCE MANAGEMENT: THREE-STAGE
PROCESS AND INFLUENCING ORGANISATIONAL FACTORS
Sandeep Krishnan Manjari Singh
Personnel and Industrial Relations Area Personnel and Industrial Relations Area
D-18, Indian Institute of Management, Wing 12-D, Indian Institute of Management,
Vastrapur, Ahmedabad 380 015, Vastrapur, Ahmedabad 380 015,
Gujarat, India. Gujarat, India.
Email: [email protected] Email: [email protected]
Tel: ++91-79-26327816 Tel: ++91-79-26324914
Fax: ++91-79-26306896 Fax: ++91-79-26306896
Abstract: A three-stage model for the process of strategic human resource management is
developed in this paper. The three stages cover strategy formulation, implementation and
evaluation. The inter-linkages in this dynamic model have been explored. The organisational
factors that have enabling or deterring influence on the success of each of these three stages have
been discussed. The paper highlights the key role played by HR professionals in these three
STRATEGIC HUMAN RESOURCE MANAGEMENT: THREE-STAGE
PROCESS AND INFLUENCING ORGANISATIONAL FACTORS
Organisations are increasingly looking at human resources as a unique asset that can provide
sustained competitive advantage. The changes in the business environment with increasing
globalisation, changing demographics of the workforce, increased focus on profitability through
growth, technological changes, intellectual capital and the never-ending changes that
organisations are undergoing have led to increased importance of managing human resources
(Devanna, Fombrum, & Tichy, 1981; Wright, 1998). In this scenario, a human resource (HR)
department that is highly administrative and lacks strategic integration fails to provide the
competitive advantage needed for survival, thus losing its relevance. Huselid and Becker (1997)
found that there were noticeable financial returns for the organisations whose human resource
management (HRM) systems have achieved operational excellence and are aligned with business
strategic goals. According to Ulrich (1998), one of the four roles of HR personnel is to become
strategic business partner. Youndt and Snell (1996) find that firms employing HR practices
according to the stated strategy are regarded to have better perceptual performance.
In recent years a host of papers have been published which look into the strategic aspects of
HRM. Kazmi and Ahmad (2001) classify various definitions of strategic human resource
management (SHRM) based on strategy-focused, decision-focused, content-focused and
implementation-focused approach. According to the strategy-focused approach, which is
supported by authors like Mathis and Jackson (1985) and Beer, Spector, Lawrence, Mills, and
Walton (1984), HRM is strategic by its very nature and all its elements have strategic linkages.
The decision-focused approach formulated by Devanna et al. (1981) is based on three decision-
making levels, namely operational, managerial and strategic and considers HRM at strategic
level to be SHRM. According to content-focused approach that is proposed by Torrington and
Hall (1995), SHRM emerges when HRM elements match the organisation’s strategy. According
to the implementation-focused approach that is brought forward by Miles and Snow (1984),
SHRM is when HRM systems help in the formulation and implementation of business strategies.
However, it is the definition based on implementation-focused approach dealing with
alignment of HR policies and practices with business strategies that has gained momentum in the
works of various researchers (Brockbank, 1999; Delery and Doty, 1996; Devanna, Fombrun, and
Tichy, 1984; Golden and Ramanujam, 1985; Martell and Caroll, 1995; Truss and Gratton, 1994;
Wright and McMahan, 1992). Wright and McMahan (1992: 298) define SHRM as “the pattern of
planned human resource deployments and activities intended to enable an organisation to achieve
One-Way Vertical Fit
Aligning HRM systems to the business strategy can be considered as a one-way vertical fit
(Devanna et al., 1984; Dyer, 1984; Golden and Ramanujam, 1985; Martell and Caroll, 1995;
Mirvis, 1985; Schuler and Walker, 1990). This alignment has been conceptualised in various
ways. Brockbank (1999) conceptualises this as strategically reactive HR. Kesler (1995) considers
this alignment as the partnering role of HR where HR is highly integrated with business
processes. This alignment is also seen in the contingency approach of Delery and Doty (1996).
The appropriate HR strategy for the specific organisational and business strategies is
discussed in the literature. Miles and Snow (1984) have studied the differences in the HR
strategies according to the organisational types, namely defender, prospector, analyser and
reactor. They discuss “make” or “buy” HR strategies where HRM systems focus on building or
acquiring human resources. Schuler and Jackson (1987a) discuss the kind of HRM systems
needed to align the human resources to three kinds of competitive strategies, namely innovation,
quality enhancement and cost reduction strategy. Cost reduction strategy demands workers to
work harder, innovation strategy requires workers to work differently and quality strategy needs
them to work smarter. HR practices follow entirely different patterns for different strategies. For
example, in case of innovation-based strategy, impetus is to be given for free thinking and
bringing in new ideas. Performance appraisal focuses on long-term results and has a long-term
focus. There are no clear-cut job descriptions and employees are given opportunity to learn
across functions. The compensation offers more variety in terms of benefits like stock options
and bonuses. Development of a cooperative culture is the aim.
Schuler and Jackson (1987b) have examined the HR practices followed by the firms
following three kind of generic strategies, namely dynamic growth, extract growth and
turnaround strategy. They have found that the HR practices vary according to these three
strategies. Smith (1982a) has explored the various HR practices followed at different stages of
Two-Way Vertical Fit
Two-way vertical fit is when HRM systems not only align to the business strategy, but also
contribute in the strategy formulation (Golden and Ramanujam, 1985; Martell and Caroll, 1995).
The HR department’s role as a strategic partner emerges in the two-way vertical fit. Lundy
(1994) proposes a model for the entire strategy formulation and implementation process. In the
model, each of the functions contributes in the strategy plan formulation, which in turn leads to
the development of various functional strategies including the HR strategy. Brockbank (1999)
conceptualises this as strategically proactive HR that involves creating future strategic
alternatives. This includes activities like creating a culture change, identifying mergers and
acquisition possibilities, tracking the market and proactively making changes. Hendry and
Pettigrew (1990) collate different works in the SHRM literature and point out that it is not
necessary that HR strategy always precede a given strategy but it can be proactive in contributing
towards the strategy formulation, understanding the linkages between structure, culture, HRM
and the strategy.
Smith (1982b) points out the inadequacies in the strategically reactive HR process. The
author proposes a process of two-way interactive planning of the business and HR strategy. In
the two-way vertical fit proposed by Lengnick-Hall and Lengnick-Hall (1988), there is an
interactive effect between business strategy and HR strategy so that each contributes to the
formulation of other. This is the integrative linkage conceptualised by Golden and Ramanujam
(1985) where business strategy and HR strategy are interactive.
Horizontal fit refers to the alignment of various HRM systems to each other. Gratton, Hope-
Hailey, Stiles and Truss (1999) and Truss and Gratton (1994) conceptualise this alignment as
horizontal linkages that express the connections created between and within the people
processes. Fombrun (1984) views this as the alignment of key HR systems and processes with
special reference to desired performance for bringing out desired behaviours and culture in the
organisation. Ichniowski and Kochan (1996) refer to the interactive effects of different HRM
practices and Delery (1998) refers to Inchniowski and Shaw (1997) and states the positive
outcomes of synergetic functioning of different HR practices. Delery (1998) classifies the
different HR practices into two groups: one, HR practices that bring out additive outcomes with
other practices and two, HR practices that have interactive effects and in concert with other
practices bring out specific outcomes.
In the configurational approach of Delery and Doty (1996), the focus is on coordinating
HRM systems to enhance horizontal fit, and then linking these systems to the business strategy to
maximise vertical fit. Wright and McMahan (1992) consider that not only HR practices should
be linked to organisational strategy, but these practices also need to be strategically linked to
each other to ensure that they are promoting the same goals.
Singh (2003) gives a broader approach to looking at SHRM by integrating various functions
and establishing the linkage of these functions with the business plan. It is important not only to
identify HR competencies in concurrence with the business needs and develop selection and
development practices to secure those competencies, but also to evolve and implement a
performance evaluation plan that links the performance of the employees to the strategic goals. It
is essential to have strategically-linked compensation system to improve firm performance and to
retain employees with required competencies. According to Lawler (1984), once the strategic
plan is developed it is necessary to design reward systems that will attract the right kind of
people, motivate them to perform optimally, and create a supportive climate and structure.
The literature in the field of SHRM that analyses the process of involvement of HR in the
strategy formulation, implementation, and evaluation has stressed on some of the critical external
and internal factors involved in this process (Hendry and Pettigrew, 1990; Lengnick-Hall and
Lengnick-Hall, 1988; Lundy, 1994; Mello, 2001; Schuler, 1992; Truss and Gratton, 1994). Truss
and Gratton (1994) bring out five key aspects that should be present in any model explaining
SHRM process. These elements are: the external environment, the business strategy that affects
and is affected by the SHRM process, the internal environment – the organisational context
within which SHRM operates, SHRM comprising the HR strategy and individual HRM
practices, and the outcomes of the process of SHRM.
The strategy formulation process is influenced by a number of external and internal factors.
Formbrun (1984) identifies technological, economical, socio-cultural and political environment
as interrelated external factors that have impact on the strategy formulation of organisations. The
changes in these factors that are manifested through better information processing, automation,
changes in the economic growth or growth in specific sectors, changes in the demographics of
work force and political influences effect the strategic direction of the organisations and thus
create the need for alignment of human resource management to these changes. Lengnick-Hall
and Lengnick-Hall (1988) categorise the external environment factors into those that affect the
competitive strategy formulation and those that specifically affect the human resource strategy.
Competitive strategy is influenced by economic conditions, industry structure, competitive
advantage, product/market scope and the distinct competence. The labour market, skills and
values, economic conditions and the culture at large influence the human resource strategy
Truss and Gratton (1994) refer to the external environment as the one that provides
opportunities and constraints to the functioning of HR in an organisation. In addition to the
factors mentioned by Formbrun (1984), the authors also refer to Tsui (1987) and Freeman (1985)
in pointing out the key external stakeholders like the government, media, environmentalists,
local community organisations and consumer advocates who can influence the strategy
formulation. The internal factors identified by Truss and Gratton (1994) through a survey of
literature are: organisational culture, dominant coalition, internal stakeholders like the employees
and management, HR department and its expertise.
Similarly, Mello (2001) refers to key external environment and internal variables that
influence strategy formulation. Competition, government regulations, technology, market trends
and economic conditions are key external environment variables and culture, structure, politics,
employee skills and past strategy are key internal variables.
Lundberg (1985), examining various influencing factors, proposes a model for business and
HR strategy. Business strategy is differentiated into current and long-term business strategy. The
current business strategy determines the current HR strategy and tactics whereas the long-term
business strategy and current HR strategy determine the probable HR strategy for the future. A
major factor that influences the current business strategy is the dominant coalition, which in turn
is influenced by the organisational culture, CEO leadership roles and the current business
conditions. The organisational culture and CEO leadership roles are influenced by the
organisational history that includes the founder’s vision, technological investments, marketing
and financial history, competition, regulations, unions, and consultants. The anticipated business
conditions, which are determined by anticipated environmental conditions and state of industry,
influence the long-term business strategy. Long-term business strategy is also influenced by the
current business strategy.
Sparrow and Pettigrew (1987) identify the external factors like technology changes, political,
social and economical climate as factors that influence the HR strategy formulation in
organisations. The authors point out that internal factors like the structure, culture, internal
politics, business direction and business outcomes interact with the external environment in the
process of HRM.
A number of organisational factors influence the SHRM process. A few general factors are
identified to be barriers to effective SHRM. Devanna et al. (1981) put forth a number of reasons
why strategic orientation may lack in the HR function. A major one is that the top management
does not perceive it important to include the HR department in the decision making process.
Mike Losey in an interview (Huselid and Becker, 1999) notes that CEOs must realise that
additional competencies are required for HR professionals HRM now entails more than basic
proficiencies like administration, transactions, compliance and keeping complaints to a minimum
but is now the bottom line stuff. It is a profession that not everyone can perform and HR
departments must develop competencies in dealing with strategic issues, business awareness and
the ability to quantify its own the contributions/ significance. Tony Rucci in the same interview
states that the three significant barriers to HR playing a more proactive role in the next ten years
are “a) Lack of basic economic literacy among HR professionals, b) Lack of comfort among HR
professionals to take risks and c) HR professionals who do not demonstrate courage of
conviction about their principles” (Huselid and Becker, 1999: 362). Research has been carried
out on the competency requirements of the HR professionals. Ulrich, Brockbank, Yeung and
Lake (1995) find in a study that knowledge of business, delivery of HR practices and
management of change are significant competencies of HR professionals. Also, they should have
a high degree of personal credibility and should master HR practices.
For SHRM to happen, the cooperation of the line managers is critical (Ulrich, 1998). HRM is
more of a line managers’ responsibility with the increasing strategic importance of HR (Brewster
and Smith, 1990; Mello, 2001; Truss and Gratton, 1994) and this requires a closer relationship
between HR and line managers (Becker and Gerhart, 1996). Martell and Caroll (1995) look at
the inclusion of line managers in the HR policymaking process as a critical element of SHRM.
Line managers could be in a better position to respond to issues concerning the employees
enabling HR managers to find more time to perform strategic functions related to HRM
(Budhwar and Sparrow, 2002). However, effective participation may be constrained by factors
like the lack of HR competence of the line managers, lack of training for taking up devolved HR
responsibilities, inadequate time for people management issues, and emphasis on short term
performance measures that causes lack of focus on achieving results through managing people
(McGovern, Gratton, Hope-Hailey, Stiles and Truss, 1997).
Mello (2001) puts forth eight barriers to effective SHRM. The first one is the short-term
orientation of firms. As most of the HR interventions or practices have long-term implications,
short-term oriented actions can hamper effective HRM. The second one is the inability of the HR
managers to think strategically. Their insufficient general management training or inability to
influence colleagues in other departments is seen as a constraint. The third is lack of appreciation
for HRM as a function. The fourth is lack of cooperation from the line managers and their
unreliability in handling HR function in their respective departments. The fifth reason that
hampers HR functioning is the increasing focus on the quantifying results. The feeling of risk in
investing heavily on human resources is the sixth reason that can hamper the development of the
employees for complementing organisational performance. The seventh reason that can also
hamper strategic linkage is the inability of the HR practices to change according to the business
needs. Most of the HR practices tend to get fixed as something permanent and then it becomes
difficult to change. The final reason would be the disincentives related to changes associated
with SHRM. Implementation of SHRM may involve drastic changes in the work practices and
other HR processes and hence may affect a lot of employees. Bringing about change is a difficult
process and people who have faced negative consequences of an unsuccessful effort to change
may obstruct the change processes of the future.
This paper integrates the whole process of SHRM – formulation, implementation and
evaluation. A dynamic model is proposed which looks at these three processes as a continuous
one. The model is examined at each of these stages to explore the various organisational factors
that influence the process of SHRM.
The model proposes to divide the process of SHRM into three stages. Figure 1 shows the
details of the three stages. The first stage is that of formulating of business strategy and
translating it into HRM strategic objectives. HR strategy evolves from the HRM strategic
objectives. The second stage is that of implementing HRM systems based on HR strategy. The
final stage is that of evaluating/ reviewing the effectiveness and strategic integration of the HRM
systems. The process of SHRM is dynamic and the three stages are closely inter-linked. The
paper later discusses the enablers/ deterrents for each of the three stages. The enablers/ deterrents
are those organisational factors whose presence/ absence would facilitate/ inhibit the process of
Figure 1 here
This model is an extension of the two-stage process that looks at the horizontal alignment of
various HR practices and linkages of these practices with strategic objectives (Delery and Doty,
1996; Wright and McMahan, 1992). The three stages of the proposed model include all five key
aspects of SHRM identified by Truss and Gratton (1994).
The First Stage
The formulation stage provides the ground for the happening of effective SHRM. The
organisation recognises HR department as a business partner and provides it with avenues for
being a proactive partner. In the first stage, the composition of the team formulating the business
strategy is very important. The presence of head of the HR department in the top team
formulating the organisational strategy will strengthen the pro-active strategic linkage of the
HRM systems. The proactive nature of HR as described by Brockbank (1999) is suitable in this
This model follows the concept of Golden and Ramanujam (1985) and Lengnick-Hall and
Lengnick-Hall (1988) of interactive business and HR strategy so that each contributes to the
formulation of other.
The external and organisational contexts influence the strategy formulation. The external
context is characterised by factors like product market situation (Lengnick-Hall and Lengnick-
Hall, 1988), nature and extent of competition (Lengnick-Hall and Lengnick-Hall, 1988;
Lundberg, 1985), labour market situation including demography of the available workforce
(Fombrun, 1984; Lengnick-Hall and Lengnick-Hall, 1988; Lundy, 1994), government policies
and laws (Sparrow and Pettigrew, 1987; Lundy, 1994), economic situation and forecasts
(Fombrun, 1984; Lengnick-Hall and Lengnick-Hall, 1988; Lundy, 1994), industry perspective
(Lengnick-Hall and Lengnick-Hall, 1988; Lundberg, 1985), and external stakeholders like
suppliers, competitors, etc. (Freeman, 1985; Lundberg, 1985).
The organisational context refers to the organisational situation that is represented through
various departments/functions. Inputs from functional areas are taken to formulate business
strategy (Lundy, 1994). The head of the HR department plays a key role here in representing the
organisation in terms of HR related issues. The organisational contexts that s/he represents are
the competencies, structural features with their advantages and limitations, policies and practices
that are followed, cultural factors and people management issues.
An important factor in the success of strategy implementation is the availability of required
competencies in the human resources. Strategy formulation is influenced by factors like whether
there are the needed competencies in the organisation; possibility of training the employees for
developing them and the gaps that exist in terms of competencies of the human resources. A
critical factor that is important in the formulation of HR strategy is the understanding of required
organisational competencies for the implementation of the business strategy. Elements of HRM
like acquiring, managing and developing the competencies are important for the success of
The structural features look into the structure of the organisation in terms of features that
may set limitations for strategy implementation or may set constraints in the changes required for
the strategy implementation. The inflexibility in these features in terms of the reporting
structures and layers of hierarchy in the organisation and formal relationship among the various
departments may impede communication and cause lack of alignment of various
functions/departments for strategy implementation.
During strategy formulation, the head of the HR department should be able to appraise the
top management about the various policies and practices that are followed and the changes that
are necessary for effective implementation of business strategy. The policies and practices may
be the written rules that are followed regarding jobs or behaviour in the organisation. In the
organisational context, this may be related to the cultural dimensions that are a set of unwritten
rules that drive the work culture and behaviour at work place.
The people management issues look into various employee-related factors that affect the
productivity at work place and their impact on a business strategy formulation. Issues like high
turnover of employees, lack of morale and motivation, low employee satisfaction, undesirable
work-place politics etc. are looked into and their likely impact on strategy implementation is
The HR head should also be able to contribute in terms of certain changes in the external
environment. For example, s/he should be able to convey the changes that are occurring in the
labour market and their implications on the business strategy formulation.
HRM strategic objectives are identified according to business strategy. The business strategy
may be based on any of the generic strategies like cost reduction, innovation or quality
enhancement. The organisation may be classified as a defender, prospector, analyser or reactor
(Miles and Snow, 1984). The HR strategy is then derived from the HRM strategic objectives.
This process is similar to Lundy’s (1994) model of strategic management, which derives human
resource plan from strategic plan based on implementation requirements.
The Second Stage
The second stage is that of implementing various HRM systems based on the HR strategy.
The vertical, horizontal and temporal linkages conceptualised by Gratton, Hope-Hailey, Stiles
and Truss (1999) fit here. Various HRM systems like recruitment and selection, performance
management, compensation, training and development, career management, etc. need to be
aligned with the HR strategy. This is the vertical linkage. Policies and practices of various HRM
systems are set or modified according to the strategy implementation needs. Based on the
concept of horizontal linkage, HRM systems also need to be aligned to each other.
Implementation stage also includes initiating interventions required for organisational
development or effectiveness and managing change during processes like restructuring or
mergers. The latter is an example of temporal linkages. Temporal linkages deal with the sudden
changes that are brought in due to strategic decisions.
Automating HRM practices and outsourcing some HRM practices can contribute to more
effective functioning of the HR department. Automation of HRM practices through human
resource information system (HRIS) also improves HR department’s capability to collect and
provide information needed for strategy formulation.
HR department plays a key role at the implementation stage. However, processes and
practices are implemented for the employees and therefore line managers, employees and
customers play an important role in their successful implementation. The second stage has a two-
way link with the first stage. Not only are HRM systems aligned with the HR strategy, but HRM
systems and their outcomes also provide information pertaining to organisational context for the
formulation of business strategy. This two-way link strengthens the role of HR department as a
The Third Stage
The final stage of the model deals with the evaluation / review of the effectiveness of HRM
systems and their strategic integration. Wright and McMahan (1992) and Truss and Gratton
(1994) consider outcomes and relevance of various HRM systems in achieving strategic
objectives as an integral part of SHRM. The extent of alignment of HRM systems with business
strategy and the contribution of HRM systems in achieving strategic objectives need to be
evaluated in order to determine the strategic integration of HRM (Tichy, Fombrun and Devanna,
1982; Ulrich, 1989). Ulrich’s (1989) relationship approach to assess HR effectiveness integrates
business strategy, HR practices and performance by analysing relationship among the three.
The evaluation stage in this model includes various surveys and evaluation processes. The
evaluation metrics need to be carefully constructed. Evaluation of HRM systems is difficult
because most of the organisations are not very clear as to what they want to evaluate – the
efficiency of the HR processes/ department, the services provided by the HR department,
financial returns in terms of employee productivity, turnover, etc. or improved performance of
employees of the organisation (Ulrich, 1989). According to Gordon (1972), it is difficult to
devise appropriate evaluation methods unless expected outcomes are unambiguous.
In the evaluation metric of this model, defining and measuring goal achievements or
outcomes of various HRM practices and activities is the first step. This may also include
organisational outcomes like employee turnover (Wright and McMahan, 1992), behavioural
perspective of measuring the desired behaviour of the employees (Wright and McMahan, 1992)
or resource-based theory perspective of measuring the achievement of desired competencies for
the organisation (Kamoche, 1996). Performance reviews and associated actions are part of this
stage. In order to determine the level of strategic integration, various HRM systems are reviewed
and analysed for their alignment to the strategic objectives. The gaps in their vertical and
horizontal linkages are identified. The evaluation metrics also include constraints in the
implementation of HRM systems, efficiency of HRM processes and level of competency of the
personnel (both HR and non-HR) involved in the implementation process.
The information collected and analysed on the evaluation metrics provide feedback for
making necessary changes in the implementation process. This information is also important in
the organisational context of business strategy formulation.
The model provides a generic framework for the process of SHRM. The outcomes at each
stage may take different forms. For example, as Budhwar and Sparrow (2002) have stated, the
importance of specific outcomes at different stages may be different. A clear-cut written down
personnel strategy may be very important in the British context though in the Indian context an
unwritten one may be the norm. However, the process followed remains the same.
ENABLERS/ DETERRENTS FOR THE THREE STAGES
The First Stage
Figure 2 shows the enablers/ deterrents in the formulation stage of the process of SHRM.
These enablers/ deterrents influence the strategic role played by the head of the HR department
in the organisational context. These enablers/ deterrents can be classified into structural, cultural,
individual and contextual factors.
Figure 2 here
In the structural factors, the absence or presence of HR representative and the organisational
policies regarding such representation play a significant role. If the HR department is not given a
place in the strategy formulation team, many of the HR related or the organisation related issues
in which the HR plays an active role would not be properly represented. The presence or absence
of such representation can be a result of many factors. Some of the factors are importance for HR
in the organisation, relevance and competence of the HR department and the perception
regarding their ability to contribute towards strategy formulation. Martell and Carroll (1995)
found in their empirical study that top management teams differentiate between HRM executives
and HRM function. HRM executives are considered valuable members of the team in spite of a
relatively modest view of the importance of the role of the HRM functions.
Cultural factors like importance given to HR issues in general (Mello, 2001) and top
management support for HR department and HR related issues help the HR representative in
taking an active role. In many organisations HR department’s function is considered to be just
supportive and it is not expected to take an active role in the top management decision-making.
In these cases HR will only be in a strategically reactive or an operational role. Golden and
Ramanujam (1985) consider top management’s expectation from HRM function as an important
factor in the integration of HRM with business strategy.
The next critical factor here would be individual factors related to the HR representative in
the strategy formulation team. The competency of the HR representative in her/his own field and
his/her ability to represent efficiently are important factors. S/he needs to have solid knowledge
of the business and the organisational context. S/he needs to keep herself/himself informed about
the changes that are happening in the external context and their influence on the business and the
people issues. Interpersonal dynamics can play a major role in the representation process. The
ability of the HR representative to influence other representatives, including the CEO, can play a
significant role. S/he also needs to understand the informal power structure, which is a critical
organisational factor for integrating HRM with business strategy (Golden and Ramanujam,
Lawson and Limbrick (1996) identify the competencies required in top HR professionals for
their role in SHRM. These competencies are classified under five groups: HR technical
proficiency, business knowledge, influence management, functional and organisational
leadership, and goal and action management.
Lastly, but not the least, are the contextual factors related to people management issues. The
contextual factors are the situations (mostly detrimental) that may arise unexpectedly in the
organisation. Very high employee turnover and severe skill shortage are examples of such
contextual factors. Such a scenario would force the top management to take note of HR issues
even if these issues are generally neglected at other times.
The Second Stage
Figure 3 shows the major enablers/ deterrents involved in the implementation stage. The
various influencing factors may be categorised into structural, cultural, operational and
Figure 3 here
In the structural category, the organisation of the HR department and the various
organisational policies regarding the roles to be played by the HR department are included. The
first structural factor deals with the organisation of the HR department in terms of the staffing
pattern of the HR department, the roles entrusted to the HR personnel, the access of the HR
department to various other business units, the reporting structure within the department etc.
Proper organisation will help in implementation and responding to implementation related issues.
The second structural factor deals with the organisational policies regarding the HR department’s
participation. These policies mainly provide guidelines regarding the situations in which the HR
department can intervene in the organisational functioning and the scope of changes that it can
The cultural factors include the HR philosophy and the internal branding of HR. The HR
philosophy integrates the various beliefs and the value systems that determine the way the
organisation manages its employees. In view of these beliefs and values, certain policies or
practices may be unacceptable to the organisation in the implementation of HRM systems. The
second factor here is the internal branding of the HR department. The internal branding of the
HR department is determined by perceptions regarding its effectiveness in the organisation, its
role in enhancing employee performance, and its capability in supporting various organisational
and employee-related initiatives. Tsui (1984) suggests that the effective functioning of the HR
department depends on its reputation among the users of its services. Demonstrating the
successes of the department can enhance its reputation. Golden and Ramanujam (1985), in their
empirical study, find that demonstration of HRM expertise through HRM successes considerably
enhances HRM function’s credibility amongst top management.
Operational issues include flexibility of HRM systems, competency of HR personnel as
identified by Ulrich, Brockbank, Yeung and Lake (1995), availability of resources, execution
efficiency, support of line managers, level of HRM knowledge of line managers and level of
HRM training of non-HR executives. HR practices in the organisation tend to become permanent
and lose flexibility to change (Mello, 2001). Lack of flexibility adversely affects the operational
efficiency of the systems as well as their ability to contribute to business strategy. Competency
of HR professionals is another important factor for this stage. The HR executives should have
sound business knowledge (Golden and Ramanujam, 1985). This would help them to understand
the relevance of the strategy that is formulated. This would also help them to design and
implement HRM systems that facilitate strategy implementation. Also, HR professionals should
have good grasp of the functional area they are working in and the competency to manage
change. The implementation process may require that considerable resources be made available
to the HR department. These resources may be in terms of providing better infrastructure or more
personnel to do the job. HR department’s efficiency in executing decisions also plays an
important role at this stage.
A critical element for effectiveness of strategy implementation is the support of the line
managers (Mello, 2001; Ulrich, 1998). To be an effective business partner, HR department
should be able to influence the business f
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