Strategic Human Resource Management: A Three-Stage Process Model and Its Influencing Factors

Article excerpt

Strategic Human Resource Management (SHRM) has captured considerable attention in research and the practitioner world. Research in SHRM has primarily focussed on the link between Human Resource Management (HRM) systems and organizational performance. The development of theoretical perspectives and proper frameworks for the mediating processes linking HRM systems and organizational performance have not got adequate attention in this literature. In this paper, a three-stage model for the process of SHRM is developed. The three stages are: (1) The formulation of business and Human Resource (HR) strategy through one/two-way vertical fit; (2) The implementation of HRM systems and employee-related interventions; and (3) The evaluation/review of HRM systems for increased efficiency and best vertical and horizontal fit. The interlinkages in this dynamic model have been explored, and the organizational factors that have an enabling/deterring influence on the success of each of these three stages have been looked at. Enablers/deterrents for the three stages have been chssified into structural, cultural, individual, and contextual factors for the first stage; structural, cultural, operational, and environmental factors for the second stage; and structural, operational, and behavioral factors for the third stage. The key players for each stage have been identified and the role of HR department in each of the three stages has been looked into. Research has shown that horizontal and vertical fit of HR practices can have an influence on the organizational performance and this paper provides a model of enactment of SHRM, and a practical approach to evaluating SHRM process in an organization.

INTRODUCTION

Organizations are increasingly looking at Human Resources (HR) as a unique asset that can provide sustained competitive advantage. The changes in the business environment with increasing globalization, changing demographics of the workforce, increased focus on profitability through growth, technological changes, intellectual capital and the never-ending changes that otganizations are undergoing have led to an increased importance of managing HR (Devanna et al, 1981; and Wright, 1998). In this scenario, a HR department that is highly administrative and lacks strategic integration fails to provide the competitive advantage needed for survival, thus losing its relevance. According to Ulrich (1998), one of the four roles of HR personnel is to become strategic business partners. Huselid and Becker (1997) found that there were noticeable financial returns for the organizations whose Human Resource Management (HRM) systems have achieved operational excellence and are aligned with business strategic goals. Youndt et al ( 1 996) found that firms employing HRM practices accot ding to the stated strategy are regarded to have better perceptual performance. In the Indian context, Singh and Vohta (2005) found evidence of how strategic HR can play a role in a small enterprise in the engineering sector. In today's context, Strategic Human Resource Management (SHRM) has become a necessity for organizations. Wright and McMahan (1992, p. 298) define SHRM as "the pattern of planned HR deployments and activities intended to enable an organization to achieve its goals."

Applying this concept of fit to SHRM based on contingency theory, we find that the fit between HRM systems and business strategy can be viewed through a few modes such as, one-way vertical fit, two-way vertical fit and horizontal fit, which are explained below. The fit essentially looks at whether the HR strategy, systems, and processes are aligned to business strategy and also a perspective whether both are aligned to each other.

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 Ramanujan!, 1985; Mirvis, 1985; Schüler and Walker, 1990; and Martell and Caroli, 1995). …