By Alex m. Mburu, Phillip Deng Ajak, Ben Rutto, Stanley C. Smot.

Strategic human resource management (SHRM) is a strategic approach to manage human resources of an organization. Compared with technical HRM, SHRM is considered a relatively new concept, despite its continuous development over the past two decades. Although there is still no consensus on an exact definition of SHRM among scholars, broad agreement has been reached on its basic function, which involves designing and implementing a set of internally consistent policies and practices that ensure the human capital of a firm contributes to the achievement of its business objectives (Schuler & MacMillan 1984, Baird & Meshoulam 1988, Jackson & Schuler 1995). The traditional HRM function, or technical HRM activities, covers a wide range of employment practices, including recruitment, selection, performance appraisal, training and development and the administration of compensation and benefits. By combining the HRM function with business strategy, SHRM reflects a more flexible arrangement and utilisation of human resources to achieve the organizational goals, and accordingly helps organizations gain a competitive advantage.

There is a vertical fit or the alignment of human resource management practices with the strategic management of the Firm. This model is largely concerned with integration and adaptation. Its purpose is to ensure that HRM is fully integrated with the strategy and strategic needs of the firm; HR policies are coherent both across policy areas and across hierarchies; and HR practices are adjusted, accepted and used by line managers and employees as part of their everyday work (Schuler, 1992: 18).

Effective human resource management requires an understanding of and integration with an organizations strategic objectives. Effective human resource management leads to improved organizational performance.

SHRM therefore has many different components, including HR policies, culture, values and practices. Schuler (1992) developed a 5-P model of SHRM that melds five HR activities (philosophies, policies, programs, practices and processes) with strategic business needs, and reflects managements overall plan for survival, growth, adaptability and profitability. The strategic HR activities form the main components of HR strategy. This model to a great extent explains the significance of these five SHRM activities in achieving the organisations strategic needs, and shows the interrelatedness of activities that are often treated separately in the literature. This is helpful in understanding the complex interaction between organisational strategy and SHRM activities.

This model further shows the influence of internal characteristics (which mainly consists of factors such as organisational culture and the nature of the business) and external characteristics (which consist of the nature and state of economy in which the organisation is existing and critical success factors, i.e. the opportunities and threats provided by the industry) on the strategic business needs of an organisation. When HR policies and practices are aligned with an organizations strategic objectives, the system can be described as vertically integrated. The traditional activities of creating remuneration and benefits packages, tracking employee progress, bargaining collectively with unions and evaluating employee performance remain under the aegis of HR professionals. The key defining aspect of strategic human resource management is not a change in the activities included under the HRM umbrella; rather, the essential shift is away from relying solely on professional and technical standards for evaluating the effectiveness of HR policies and practices, and toward the use of measures of organizational effectiveness as the primary criteria for judging effectiveness

Michael Porter (1980; 1985) identified three possible generic strategies for competitive advantage in business-: Cost leadership (when the organization cuts its prices by producing a product or service at less expense than its competitors); Innovation (when the organization is able to be a unique producer); and Quality (when the organization is delivering high-quality goods and services to customers). Considering the emphasis on external-fit (i.e. organizational strategy leading individual HR practices that interact with organizational strategy in order to improve organizational performance), a number of HRM combinations can be adopted by firms to support Porters model of business strategies. In this regard, Schuler (1989) proposes corresponding HRM philosophies of accumulation (careful selection of good candidates based on personality rather technical fit), utilization (selection of individuals on the basis of technical fit), and facilitation (the ability of employees to work together in collaborative situations).

Thus, Firms following a quality strategy will require a combination of accumulation and facilitation HRM philosophies in order to acquire, maintain and retain core competencies; Firms pursuing a cost-reduction strategy will require a utilization HRM philosophy and will emphasize short-run relationships, minimize training and development and highlight external pay comparability; and Firms following an innovation strategy will require a facilitation HRM philosophy so as to bring out the best out of existing staff In summary, according to the externalfit philosophy, the effectiveness of individual HR practices is contingent on firm strategy. The performance of an organization that adopts HR practices appropriate for its strategy will then be higher.

This model is over-prescriptive and too hypothetical in nature. It needs a lot of time to gain an understanding of the way strategic business needs are actually defined. The melding of business needs with HR activities is also very challenging, mainly because linkages between human resource activities and business needs tend to be the exception, even during non-turbulent times Most HR practitioners equate strategic HRM with `having a seat at the table` (being a member of the top decision making team), yet they do not ensure that employers meet the needs of all employees.

Stanley C Smot
Philip Deng Ajak Ben Ruttoh

: SBE/MBA/015/11
: SBE/MBA/022/11 : : SBE/MBA/025/11

Alex Munyaka Mburu: SBE/MBA/030/11