In order to gain competitive advantage from the human capital, there is a growing tendency to conceive of HRM from a strategic view point and to relate HR strategy with overall corporate and business strategies. HR strategy is part of overall business strategy. HR strategy is critical to the successful implementation of a company’s business strategy.
Numerous factors which affect HRM in global markets are culture, economic system, political system-the legal framework and human capital( Noe 2000).
Appleby and Mavin(2000) have defined strategic human resource management as follows:
Human resources are the efforts, skills and capabilities that people contribute to an employing organization which enable it to continue in existence. Although difficult to define, SHRM is generally perceived as a distinctive approach to managing people which seeks to achieve competitive advantage through the strategic development of a highly committed and capable workforce.
Strategic human resource management is largely about integration and adaptation. Truss and Graton have defined Strategic Human Resource Management (SHRM) as ” the linking of HRM with strategic goals and objectives in order to improve business performance and develope organizational cultures that foster innovation and flexiblity.”
People are also strategic assets for a company. HR is a strategic asset because it can play a critical role in both strategy implementation and management systems.
Organizational assets rise to the level of a strategic asset when they become a source of competitive advantage.
The strategic human resource management process is as follows:
- Agreement on and initiation of the strategic management process
- Identification and clarification of the organization’s missions, objectives and current strategies
- Assessment of the threats and opportunities from the external environment
- Identification of key constituents/stakeholders and their expectations
- Identification of key strategic issues confronting the organization.
- Design/analysis/selection of strategy alternatives and options to manage key strategic issues
- Implementation of strategy
- Monitoring and review of strategy’s performance
The strategic role of HR management focuses attention on how to get optimum work performance from employees of an organization. The key areas of attention in this era of global competition include effective management of key resources( employees, technology, work processes) while delivering cost effective value enhancing solutions.
HR’s role is to deliver strategic services cost effectively by building a competent consumer oriented workforce.