Rationale of strategic human resource management

Literature on the development of traditional human resource management for the past thirty years and more has been on the emphasis for a complete shift from traditional human resource management to strategic human resource management. The arguments fit into a widely accepted reason for accepting strategic human resource management as a way forward for corporate excellence (Storey 1989; Quinn 1991; Stewart 2008; Inyang 2010). The main contributions come from debates developed during the moulding of British and American models of human resource management. Therefore, according to these debates, the rationale for SHRM is summarised as follows:

It is an integral part of business strategy

Business strategy is a plan that indicates the direction of the organisation. It brings the organisational vision, mission, policies, goals and objectives together. It can be at the level of the organisation, department or business unit. It is developed based on the knowledge of the organisational environment including strengths, weaknesses, opportunities and threats. Since the organisation will have different strategies including, technological, capital, energy, marketing, finance etc, human resource strategy is one among many strategies but is more important than others because of its human nature.

The link between business strategy and HRM

Any business strategy will have human resource implications which include number, qualifications, working hours, training, pay, conditions of work etc. If, for example, one of the business strategies is to change the line of business after 5 years, then the necessary  changes have to be planned as part of human resource strategies including training, layoffs in time, sub-contracting some jobs etc. as the need arises.

Formally declaration of intentions in managing HR

Securing the commitment of employees requires the building of trust on the part of the management. Employees have to be assured of their future in the organisation through some kind of documentation. Human resource strategy is one such useful document; it gives a rough picture of how the management values employees and the reasons as to why employees should be committed to the future of the organisation.

Generating a competitive edge

A competitive edge is generated from the quality and number of staff the organisation has. Quality is measured in terms of the level of competence while the staff numbers depend on the required employee – job ratio and number of working hours. Human resource strategy is a tool used for assisting the organisational process of gaining a competitive edge by recruiting the best people, using the best labour in the most effective way and putting the incentives in place that can retain the best people and develop them so that they, through their knowledge, stand at the forefront of management and labour utilisation.

Partnership between the management and workers

Under SHRM, the director of human resources represents employees as a partner in business. Employees are partners in business in the sense that they have a stake in the organisation that requires the full cooperation of all parties so that, organisational objectives, team objectives as well as individual objectives are realised. A SHRM document is useful in identifying the role of each partner in strategic business performance. Millmore et al. (2007) have dealt in detail with the roles of human resource strategy and which are well summarised by Bhatia (2007). These include shaping the mind-set of the management and staff, facilitating the process of decision-making and action to be taken, working on human resource implications of specific strategic decisions and establishing strategies for cost reduction, defining opportunities for better capacity utilisation, and creating future managers by nurturing talent.