A Research on Strategic Human Resource Management --An Integrated Model

A Research on Strategic Human Resource Management
--An Integrated Model
GAO Suying1, 2, ZHAO Shuming1
1. School of Business, Nanjing University, P.R.China, 210093
2. School of management, Hebei University of Technology, P.R.China, 300130
[email protected]
Abstract: Though the scholars define Strategic Human Resource Management (SHRM) from different
angles, it has not yet been clear enough and need to be further studied. This paper first makes a new
definition on the concept of SHRM by literature review and analysis. And then, it analyzes the ‘fit’ and
‘flexibility’ between and within the HRM system and the organizational strategy, points out that if
environment is certain, ‘fit’ is very important. However, in dynamic environments only ‘fit’ is far from
enough, and ‘flexibility’ comes to be crucial. At the same time, the important role of the staff can not be
ignored. In short, only an integration of various elements can be more effective to enhance
organizational performance. Therefore, the paper provides an integrated model of SHRM in the hope of
offering a theoretical basis for the organization to enhance its performance through HRM.
Keywords: SHRM, fit, flexibility, the attitude and behavior, integrate
1 Introduction
Human Resource (HR) and Human Resource Management (HRM) have become more important and
popular since Peter F. Drucker firstly put forward the concept of ‘human resource’. Especially in the
past 20 years, they have made some substantial development and resulted in a lot of new researches.
One of them is Strategic Human Resource Management (SHRM), which emphasizes on the strategic
role of HRM to achieve organizational goals and is concerned in the use of a variety of HRM practices
to achieve the goals, as well as how these practices work together to improve organizational
performance.
However, up to now, people are in the process of actively exploring about how HRM practices affect
organizational performance, whether or not the influence of one certain practice to organizational
performance is higher than that of the others, whether or not it exists " the best human resource practice",
what kind of relationship between organizational strategy and HRM is, whether or not HRM and
organizational goals achieving an effective fit can improve organizational performance ,whether or not
flexible management can improve HRM to adapt to environment and so on. This paper will firstly
review and analyze some concepts and theories of SHRM, then propose an integrated model which
show the strategic importance of HRM, finally provide the integrated model for the organization to
obtain competitive advantage through HR.
2 The Definition of Strategic Human Resource Management
Mahoney and Deckop (1986) firstly differentiated personnel administration and HRM. They considered
that personnel administration is concerned with some independent activities, such as recruitment,
training and compensation et al., but HRM is concerned with the integration of HR policy to enhance
organizational performance, Three years later, Fisher (1989) further distinguished macro-HRM and
micro-HRM. She noted that the distinction between the concerns of top HR executives such as tying HR
to strategy and dealing with strategic issues such as mergers and acquisitions, international HRM, and
downsizing, and the nuts and bolts activities of operational HR managers such as selection, training,
compensation, and performance appraisal. Ferris, Hochwarter, Buckley, Harrell-Cook and Frink (1999)
explored strategic, international, and political perspectives of HRM. Wright and Snell (2002) used a
useful generic approach for classifying these streams of research which is to examine two relatively
independent dimensions (the level of analysis dimension and the number of practices
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examined).Traditionally, micro-HRM has explored the impact of HR practices to individuals. But
macro-HRM examines the impact of HR practices to the organization (corporation or business unit).
The researches mostly assess variables through asking an informed respondent to provide the relevant
value for his/her organization.
But in fact from the 80's of last century, HRM has made a very large change in direction. It is from the
completely oriented to micro-HRM to micro-HRM, macro-(strategy) HRM in parallel. It also appears a
very important field: SHRM, which from a single management function tries to integrate into the overall
strategic management.
The birthplace of SHRM is "Human Resource Management: A Strategic Perspective" (Devanna et al,
1981). In this paper, the authors clearly put forward a strategic perspective to study HRM. In fact,
Walker (1978) early proposed that business planning (although there is no specific strategy) and HR
planning should have a better contact.
Wright and McMahan (1992) defined SHRM as “the pattern of planned human resource deployments
and activities intended to enable the firm to achieve its goals”. Schuler (1992) considered that SHRM is
in use of integration and adaptation in order to ensure that: (1) HRM and organizational strategic must
be fit to each other. (2) It is consistent with vertical and horizontal fit between HR and organizational
policy; (3) HRM practices are adjusted and amended to be participated by the managers and employees.
And he also proposed 5P model, that is, HR Philosophy, HR Policy, HR Plan, HR Practice, HR Process
(Zhang et al., 2005）.Martell and Caroll (1995) also had a definition on SHRM.
We can see from above that these definitions are still not clear enough to define SHRM, such as the
difference between SHRM and the micro-HRM, what kind of role of HR is in strategic management,
how SHRM impacts the organizational performance and so on.
Based on all of the above we define SHRM that it is different from the traditional role, but overall
approach-oriented, it tries to link HRM with organizational goals and organizational strategy process, it
emphasizes on collaboration and fit among HRM activities, HRM activities and other management
activities, it strives to enhance the position of HRM, and it promotes to achieve organizational objectives
and competitive advantage. In short, SHRM is very important to achieve the organizational goals.
At present, researches about SHRM is relatively more; one of them is about fit and flexibility, they are
critical to improve organizational performance.
3 The Study of fit of Strategic Human Resource Management
Strategic fit is the core concepts of SHRM. Nadler and Tushman (1980) defined fit as "the degree to
which the needs, demands, goals, objectives and/or structure of one component are consistent with the
needs, demands, goals, objectives, and/or structure of another component" This emphasizes on two
types of fit. First, vertical fit involves the alignment of HRM practices and the process of strategic
management (Schuler et al., 1987). Second, horizontal fit implies congruence or fit among the various
HRM practices (Baird et al., 1988). Vertical fit is viewed as directing HR toward the primary initiatives
of the organization, whereas achievement of horizontal fit is viewed as instrumental for efficiently
allocating those resources. Inherent in most treatments of fit is the premise that organizations are more
efficient and/or effective when they achieve fit relative to when a lack of fit exists (Baird et al., 1988;
Lengnick et al., 1988; Milliman et al, 1991; Montemayor, 1996; Nadler et al., 1980).
3.1 The horizontal fit of Strategic Human Resource Management
HR practice is one kind of organizational activities, which aims to manage human capital pool to
complete organizational goals (Wright, 1994).Fewer studies have focused on single HR practices at the
organization level. Most of studies have sought to demonstrate an empirical relationship between the
HR practice and some measure of organizational effectiveness. Some studies focus on evaluating the
impact of HR practices ,such as selection and staffing (Terpstra et al., 1993), promotion systems (Ferris
et al., 1992), training (Bartel, 1994, Russel et al, 1985), compensation (Shaw et al., 2001), work teams
(Collins et al., 2003) to the organizational performance.
Though scholars focused on different HR practices, we can feel that all of them were trying to prove a
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particular relationship between HR practice and organizational performance. The studies often are
driven by a motivation to prove that a certain functional area "matters." All the studies attempt to clearly
identify which can affect organizational performance, and provide references for the organizations;
however, such studies are problematic for a few reasons.
First, up to now, it is inconclusive about which practice can best improve organizational performance,
and it is difficult to find the best practices (Becker et al, 1996). All of them will make HR managers feel
confused.
Second, they ignore that some potential relationship might exist with practices. There are four types of
relationships among HRM practices(additive, substitutable, positive synergistic, and negative
synergistic）(Delety,1998).Some have independent and on-overlapping effects on the outcome. This
would be the case if using both practices together resulted in a greater level of the outcome than using
either one alone, but not more than the sum of the individual effects of each practice. Some practices
exhibiting an interactive relationship may be substitutes for one another. This occurs when both
practices lead to the identical outcome (Delery, 1998).So all the HR practices do not exist in isolation. It
may be not only overestimating HR practices if we are only concerned with one single HR practice, but
also overlook them. In addition, such attempts seem to ignore the basic conceptual model that HRM
system, rather than an individual practice, impact employees and organizations. As we discuss later as
regard to horizontal fit, a single practice might have a profound impact on performance, more frequently
multiple HR practices influence performance.
In short, it is incomplete. Huselid et al (1996) emphasized that only HRM system can create sustainable
competitive advantage, rather than a single HRM practice. One single practice is easy to copy. Only
integrated HRM system has the characteristics of nature, complexity, and difficult to imitate and
path-dependent, which is consistent with Barney's opinion (Barney, 1998). Barney reiterated that a
single HR practice can not be used as a source of competitive advantage, highlighted the systematic role
of HR to obtain competitive advantage in the process. It is more meaningful that we are concerned about
HRM system impacting on organizational performance, which contribute to the development and
strengthening of HRM policies and practices of internal consistency.
HRM system is able to attract, develop and maintain organization's HR (Lado, etc., 1994), it is a
company-specific knowledge, technology, capacity, relationships and the value of staff knowledge
storage (Lado et al., 1994; Tomer, 1987).
HRM can affect communication, work designing and evaluation et al. Mobility, change of environment
and strategic uncertainty make the staff always confused, it can be seen that it will be difficult for
competitors to imitate HRM system at these specific historical conditions (Wright, 2001). This shows
that HRM system is formed in specific historical conditions. With the characteristics of job selection,
adaptive characteristics of society, HR system can enhance individual and organizational adaptability,
cooperative production, compensation, performance incentives, which is effective in interacting between
the organization and the staff. But in the bureaucratic HRM system, the staff will sacrifice the company's
interests in return for personal interests (Lado et al., 1994).
3.2 The vertical fit of Strategic Human Resource Management
Many scholars have linked HRM system with organizational strategy (Miles et al., 1984). They
investigated how they work together to affect organizational performance (Delery, etc., 1996) since
only a series of high-performance, high degree of unity, and fit between HRM system and organizational
strategy can achieve higher performance (Wright et al., 1991; MacDuffie, 1995; Ferriset et al., 1999;
Youndt et al, 1996).
Different strategies require different HR practices and HRM system. The cost-based strategy tends to
emphasize on efficiency and cost minimization, it goes in for the standardization of procedures and strict
control, so it is suited to the use of flexible HRM system; the adoption of innovative strategic needs
creative and dynamic staff, and it also need make long-term commitment with the enterprises, which
requires to foster long-term point of view to treat employees, so it is suited to the use of
investment-oriented HRM system; quality strategy needs a high degree of staff participation and team
work, so it is suited to the use of participation-based HRM system in line with these
，
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requirements(Schuler et al.,1987;liu et al.,2005)
4 The Flexibility of Strategic Human Resource Management
It is very important that HR practice and organizational strategy achieve fit, organizations are more
efficient and/or effective when they achieve fit relative to when they are absent of fit (Baird et al., 1988;
Lengnick-Hall et al., 1988; Milliman et al., 1991; Montemayor, 1996; Nadler et al., 1980; Venkatraman,
1989), but this should be a dynamic process, because organizations are faced with a complex and
dynamic environment which require to adapt to diverse and changing requirements.
Environment, including institution, cultural, economic and other aspects, all of them can affect HR
practices. Institutional factors affect the behavior of the staff and organizational performance (North,
1981). When recruiting employees, the subsidiaries of multinational corporations rely on the host
country, the home country's culture, a subsidiary of ownership, such as institutional environment, as well
as the company's competitive strategy (JI LI et al., 2008). Cultural diversity enhances the accuracy of
company decision-making, which can effectively improve organizational performance (Watson et al.,
1993; McLeod et al, 1996). Cultural diversity means different contact and cultural background of people
in the same society (Cox, 1994), including racial differences, sex, nationality and age (Richard, 2001).
Richard (2001) considers racial difference was value, scarce, and difficult to imitative, but the impact on
organizational performance was subject to environmental constraints. Jackson and Schuler (1995)
summarized the entire external environment. In a word the competitive environment becomes
increasingly complex (Zhao et al., 2008).
This makes a growing recognition that it is important not only had the exertion of strategic fit, but also
the implementation of its strategic flexibility. The organizations require adapting to diversity and
changes in capacity because they face a complex and dynamic environment (Snow et al., 1993).
Therefore, SHRM should pay more attention to how to develop the ability to adapt to changed
environment (Snell et al, 1996). Miles et al (1984) considered flexible management can cope with a
rapidly changed environment. Flexible management focuses on equality and respects of the staff, helps
to improve the learning ability and organizational changes in the external environment, improves
organizations fleeting market opportunities and grasps the degree of sensitivity. The organization can
create an opportunity of competitive advantage through knowledge sharing, integration, competition,
cooperation, complementary differences and virtual communities et al (Cao et al., 2005).
Then Wright and Snell (1998) presented a model for studying the concepts of fit and flexibility of
SHRM, The top half of the model depicts the fit component to the model—the means through which the
firm seeks to fit HRM practices, employee skills, and employee behaviors to the immediate competitive
needs of the firm as dictated by the strategy. The lower half of the model illustrates the flexibility
component, which focuses on developing the organizational capability to respond to a variety of
competitive needs other than those dictated by the current strategy. They proposed that fit and flexibility
are complementary, particularly because they focus on different aspects of organizations. One can view
fit as a state that exists at some point in time and, flexibility as a firm's ability to quickly reconfigure
resources and activities in response to environmental demands.
Down this line of thought, Wright, Dunford and Snell (2001) put forward the basic content of SHRM.
They considered that SHRM consists of three major components: HRM practices, human capital,
organization members’ relationship.
5 The Integration Mode of Strategic Human Resource Management
From above, we know that SHRM is no longer only paying attention to the traditional functions of HRM,
but tries to combine HRM with organizational goals, environment to investigate their impact on
organizational performance, but there are still some shortcomings.
Firstly, the measurement of relevant variables is not accurate enough. Researchers use different
indicators on the same variable, such as organizational performance. Some studies adopt financial
indicators, while others use productivity. All of them has brought inconvenience and also made the
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results inaccurate.
Secondly, SHRM has paid more attention to the relationship between HR practices and organizational
performance, but neglects the attitude and behavior of the staff. But Boswell 2000 showed that the staff
are very important for achieving strategic objectives and ultimate success. He considered that it is
important that the staff understand organizational strategy. But what is more important is that how the
staff makes the success of strategy and the completion of a wide range of job. Only having HR can not
improve organizational performance, it should inspire the enthusiasm of the staff and the fit between
their work objectives and organizational goals. How to recruit staff, how to enhance staff's ability and
how to improve employee’s enthusiasm and job satisfaction, are all the keystones of HRM function.
Finally, the ingredients of the SHRM have not been combined with each other. Although Wright et al
(1998, 2001) made attempts, but their models were only concerned with one aspect, such as Wright and
Snell (1998) presented a framework for
Mission
studying the concepts of fit and flexibility,
but they were only concerned with HRM
Goals
practices fit with the organizational goals
and
the
coordination
of
external
environment, but neglected the importance
Strategy
of the role of the staff. Though Wright,
Dunford and Snell (2001) were concerned
flexibility
fit
Environment
with the importance of the employees, but
flexibility
they ignored the importance of flexibility.
In short it is necessary to integrate all the
fit
fit
fit
fit
fit
fit
fit
variables together to enhance organizational
performance. Based on above, we propose
the integrated model of SHRM as shown in
Figure 1, only the integration of these
fit
fit
fit
fit
fit
fit
fit
factors can be more effective to enhance
organizational performance.
(1)It integrates all the single practices into
an effective HRM system. HRM system
impacts the attitude and behavior of the staff,
Human resource management system
fit
fit
fit
fit
fit
fit
fit
mobilizes the enthusiasm of the staff, is
consistent with organizational goals, and
Attitudes and behavior of staff
thereby
enhances
organizational
performance.
(2)Strategy and environment will affect the
Performance
function of HRM to organizational
Figure 1 an integration model of SHRM
performance. HRM system has to adapt to
organizational strategies, at the same time, it also distributes effective HR to achieve strategic objective
and horizontal and vertical fit between HRM system and strategy. HRM must have certain flexibility to
face the complex external environment. Flexibility focuses on the cultivation of personal abilities, helps
to improve the speed of the external environment reflection and the payable ability. Environment will
affect HRM system; the change of the environment will affect the organization's HR practices. The fit of
HRM system with strategies is a good ability to cope with environmental change, and will improve
organizational performance.
(3)Strategy and environment will affect the attitude and behavior of the staff. Different strategy and
environment will affect HR practices, such as recruitment, training and compensation, as well as HR
policy.
(4)To achieve the overall organizational efficiency, as well as quick and effective local response, HRM
should link with strategy, environment, and internal factors in order to obtain the integration and
consistency.
（ ）
Performance management
Career planning
Participation work design
Selection
Compensation
Training
Employment
Recruitment
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6 Conclusion
From above, we know that though the scholars define SHRM from different angles, it has not yet been
clear enough and need to be further studied. So the paper firstly makes a new definition on the concept
of SHRM by literature review and analysis, then analyses the shortage of a single HR practice, proposes
that it should integrate all the single practices into an effective HRM system to achieve horizontal fit,
furthermore proposes that it should link HRM system with organizational strategy to achieve vertical fit.
Because only a series of high-performance, high degree of unity within the HR practices, and fit with
the strategy, the organization can achieve higher performance. And this fit should be a dynamic process,
so flexibility is introduced into the model. But even more important, it should not ignore the importance
of the staff. Finally the paper put forward an integrated model of SHRM in the hope of offering a
theoretical basis for the organization to enhance its performance through HRM.
We have a more clear understanding of SHRM, as well as the importance of strategy and environment to
organization performance through the paper. On the basis of the integrated model, we can design the
corresponding assumptions and have some empirical studies testing how HRM practices integrate
together and impact organizational performance in the future studies.
Acknowledgements
The research is supported by the Key Program of China National Natural Science Foundation
(No.70732002), Hebei Natural Science Foundation (No. G2009000137), Soft Science Foundation of
Tianjin (No. 06ZLZLZT01300), Soft Science Foundation of Hebei Province (No. 06457277)
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