Theoretical Basis, Models and Practices of SHRM

This article discusses the theoretical basis, models and practices of Strategic Human Resource Management (SHRM) and its relationship with business strategy. It evaluates and compares different SHRM models such as Harvard HRM Model, SHRM Diagnostic Model, and Management by Objectives. It also covers HR practices such as performance management, reward, development and learning, and change management. The article includes a case study of Merrill Lynch and examples of companies like Google and GSK.

Running head: The theoretical basis, models and practices of SHRM 1
Strategic Human Resource Management
The theoretical basis, models and practices of SHRM

The theoretical basis, models and practices of SHRM 2
Contents
Introduction......................................................................................................................................3
Task 1...............................................................................................................................................4
The relationship between business strategy and the human resource strategy............................4
SHRM models..............................................................................................................................5
Harvard HRM Model...............................................................................................................5
SHRM Diagnostic Model.........................................................................................................6
Management by Objectives......................................................................................................6
Critically evaluate, compare and contrast, the theoretical basis and models of SHRM..............7
HR practices of Performance Management.................................................................................9
Reward....................................................................................................................................10
Development and learning......................................................................................................11
Change management..............................................................................................................12
Task 2.............................................................................................................................................13
Employee Relations...................................................................................................................13
Evaluate theoretical perspectives of Employment Relations with models................................14
The Roles of the Actors In Er....................................................................................................16
The changing nature of ER........................................................................................................17
Voice and participation 300 words............................................................................................17

The theoretical basis, models and practices of SHRM 3
Conclusion.....................................................................................................................................18
References......................................................................................................................................19

The theoretical basis, models and practices of SHRM 4
Introduction
Strategy is the process which is used within the organization to improve the productivity of the
employee. Human Resource Management analyzes all aspects of human resource and using it to
the utmost level (Sajeevanie, 2015). Hence, SHRM is the latest concept of Human Resource
Management. The case study of Armstrong will be incorporated to define SHRM in an
appropriate manner. The discussion will be made on SHRM in details which provide better
understanding about the relations between human resource strategy and human resource strategy.
There are number of models available of SHRM, some of them will be explained in the context
of showing the role of it within the organization. Performance management is vital in the
organization as it helps to set the vision, mission and objectives of the company. Employment
relations are important to maintain the modesty within the organization for enhancing the mutual
understanding. It will be helpful to achieve the objectives of the organization. The models of
employment relations and SHRM will be described in this assignment. The roles of the actors
within the Employment Relationship are to bring the effective relationship. Employee voice
defines the concepts and themes of the participation and involvement of the employee.

The theoretical basis, models and practices of SHRM 5
Task 1
The relationship between business strategy and the human resource strategy
The relationship between human resource strategy and business strategy are supported in many
ways. Business strategy emphasises the competitive advantages and assists to determine the
direction in which the business is able to build its own environment. Human resource strategy is
a description for making long term plan to attain aims of human resource and human capital
management and development within the organization. An organization that synchronizes its
business strategy and the policies and practices of human resources attain a better performance
result than those that do not.
Vertical integration is the component of the competitive strategy where a company enlarge its
business into various steps on the similar path of production. It helps to determine the control
over the supply of the raw materials to produce (Prajogo, Mena and Nair, 2018). The example of
it can be a produce distribution business and a green grocery. Apple Company is vertically
integrated and the most advantageous point of it provides organization to engrave the entire costs
by incorporating the value of customers. It is Hardware Company, Retail Company, Software
Company and Services Company which makes it vertically integrated. On the other hand,
horizontal integration is also a competitive strategy that assists to enhance the company’s value.
The organization can expand its business and enter into new market with help of it. Cadbury and
Volkswagen are the perfect example of it. Horizontal fit between the HR strategy and the HR
functions such as recruitment, performance management, rewards, learning and voice. There is
another example of IKEA and Google in which IKEA has adopted vertical strategy and build
human resources while Google has adopted horizontal strategy and acquire human resources.

The theoretical basis, models and practices of SHRM 6
SHRM models
Harvard HRM Model
Harvard HRM model is comprised with six components such as stakeholder interest, HRM
policy changes, long term results, feedback, HR outcomes and situation factors. It is facilitated to
link human resource strategy and business strategy. The Harvard model recognizes the existence
of various stakeholders within the organization. The multiple stakeholders involve shareholders
such as government, employees and community at large.
Figure 1: Harvard model of HRM
Source: (Brunetto, Farr-Wharton and Shacklock, 2011).
It has been shown in this mode that the situational factors and stakeholder interest assist to link
human resource strategy with business strategy. Human resource strategies help to attain the

The theoretical basis, models and practices of SHRM 7
objectives of the organization. This model highlights the soft side of HRM and the importance of
employee within the organization is equivalent with any other shareholders.
SHRM Diagnostic Model
The SHRM Competency Model identifies the factor which helps organization to be a successful.
It demonstrates the relationship between human resource strategy and business strategy in which
it explains the knowledge and competencies for effective practice of HR professional (SHRM,
2016). The centre of the model involves the core competencies of “HR Expertise and practices”
comprising Human Resource Development, compensation and advantages, workforce planning
and Employee Labour Relations. It is the model that widely used in the business for explaining
and assessing competencies within organization by using both hard as well as soffit skills
(Redman and Wilkinson, 2009). There are some examples of competencies such as team
working, decision making, awareness, leadership, communication and commercial awareness.
Management by Objectives
Management by objectives is the process of attaining the goals of the organization by involving
the incorporation of employees and managers. Vertical integration is related to the competitive
strategy by which an organization control over various steps in the distribution. There are five
steps of management by objectives like changes in the organizational objectives, explaining it to
employees in concise manner, stimulate the involvement of the employees in decision making
process, monitoring the progress and evaluating the performance and provide rewards and
recognition. In the context of horizontal integration, MBO helps many companies to enter into
new market. Intel is the company that adopts MBO in its strategy. The manager of Intel provides
the directions and set a list of objectives and evaluates the performances. As per the
performance, rewards are distinguished to the employee.

The theoretical basis, models and practices of SHRM 8
Critically evaluate, compare and contrast, the theoretical basis and models of SHRM
Best practice
It is a Universalist approach that increases the connection between organizational performance
and HR practices and linked with high commitment management. It is based on the superiority
idea of the performance of the organization. This practice will make mutual combination such as
compensations and collaboration on the basis of the individual performance (HR ease, e.d).
Best fit
The best fit model emphasizes the importance of HR strategies and organizational strategies. It is
necessary that the feature of HR strategies should be compatible with various conditions through
operational process. According to Armstrong, (2006), it is necessary for this theory to focus on
the needs of the employees and the organization. It has been found that this strategy has various
limitations as it is hard to manage the challenges within the organization sue to lack perfection in
HR system (Ahimbisibwe, Cavana and Daellenbach, 2015).
Figure 2: Best fit model of HR strategy
Source: (HRM, 2016).

The theoretical basis, models and practices of SHRM 9
Resource based view
The resource based view is the approach that impacts the strategic human resource management
of the firm. This approach facilitates to determine remains resources within the organization and
link them with the potential of the company in an adequate manner (Wu and Chiu, 2015). It is
compulsory that organization deals with resources and products or services and to attain the
competitive advantages, organization need to utilize the resources in efficient manner.
Figure 3: Resource based view model
Source: (Wu and Chiu, 2015).
It has been found after evaluating the models of SHRM that it provide powerful tools for
structuring the process of human resource management. It is not possible to define that which
model will be suitable for the organization as each model has different features and quality to
manage the workforce but after considering the three models of SHRM, it can be said that the
best fit model will be good to work better in comparison of others. It has the quality of entire
appeal to HR practioners due to the actual fact that enables it to keep position in the organization.

The theoretical basis, models and practices of SHRM 10
HR practices of Performance Management
The goal of performance management system is to improve the effectiveness of the employees.
There is a case study of Merrill Lynch who moved away from his traditional performance
appraisal system to implement a performance management system (Shiyamala, 2012). It includes
three phase of planning, monitoring and reviewing which are mentioned below;
Phase 1 – Plan
It is considered as the collaborative efforts in which managers and employees involve during
which they will review the job description of the employee to verify if it shows the work that the
employee is performing at present. The job description should be updated at the time of new
responsibilities of employee (HRcouncil, n.d.).
Phase 2 - Monitor
Employee progress and performance must be monitored continuously for a performance
management system to be effective. It is vital to recognize the barriers that might prevent
employee to accomplish the task within time frame (Dutton and Ragins, 2017). Feedback should
be shared on progress relative to the goals.
Phase 3- Review
The performance assessment is a chance to review, highlight and define the performance of
employee over the way of the review period. It is necessary for Merrill Lynch to recognize the
unseen barriers of the organization that prevent employees to attain the aims. This process
facilitates to recognize the gaps between the views of the managers and the employees self-
perceptions.

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360 degree feedback
It is employee development feedback that comes from managers, colleagues and peers in the
organization. It should be accepted by organization as it helps to improve the performance of the
employees and the organization continuously and focuses agenda for development. It clarifies
the critical performance aspects. It allows open feedback that perceived as more effective, lading
to acceptance of results and actions needed.
Reward
A reward strategy explains the way of using the reward practices, policies and processes to
sustain the delivery of its business strategy. There is an organization like the HK government that
adopts of financial approach for reward system while others companies are moving towards a
holistic approach to financial as well as non-financial total rewards schemes for encouraging
staff and to deliberately align (Zadeh, 2009). The strength and weakness of traditional pay
schemes and the new total reward approach are defined below.
Strength and weakness of traditional pay schemes
Traditional pay schemes sets pay level in a narrow term which increase annually with certain
percentage as per the performance. There might be 3 to 4 percent increment done annually. The
strength of traditional pay scheme is correlated with seniority and based on individual
performance. Traditional pay schemes are matter to federal control that sustains consistency of
pay scales. The weakness of this system is ineffective approach to judge the performance of the
employee. It has less impact over the employee to encourage them (Nordmeyer, 2017).

The theoretical basis, models and practices of SHRM 12
Strength and weakness of total reward approach
A total reward approach is an effective that includes various benefits and pay. The strength of
this reward approach is increasing the employee engagement and retention by motivating them.
It helps business to communicate with employees who remove hesitation and meet with various
new ideas and views regarding change. The weakness of this approach within the organization is
lagging the market due to budgetary constraints (VanOrnum, n.d.). Total reward strategy is
adopted by GSK which consists of three elements such as life style benefits (employee
assistance, family support, and healthcare), total cash (incentives, salary and bonuses) and saving
choices (pension plan, share reward).
It has been recommended by analyzing the different approach of reward system that total reward
approach is beneficial for the organization. Google is a great example of it where employees of it
are now more vocal. Google provides huge range of incentives to its employee as per their
performance and endeavour to reduce the barriers that could distract its employees from their
ability to be top performers.
Development and learning
Development and learning plans should maintain the goals and the benefits of the company and
stakeholders. It is necessary for the company to involve needs analysis, design, delivery and
evaluation in the process to design learning and development approach to meet performance
gaps. It is required for the company to analyze the needs of the organization in an appropriate
manner. Remploy is the government funded organization that developed the development and
learning strategy from the bottom up which is effective approach. Google is the company that
analyze the needs of the employee and provides number of services to its employees such as

The theoretical basis, models and practices of SHRM 13
there are day care and elder care centres, spa and salons etc. design defines that company should
design the strategy for developing the encouragement of the employees. Delivery refers the
process of coordination with entire strategy of the company. Evaluation is necessary to judge the
performance of the employee and the outcomes.
Change management
It is vital for the organization to consider the change model while implementing changes in the
process of the organization. Kotter’s 8 step change model using a careful step by step model to
be successful. The first step of create urgency that focus on develop a sense of urgency. Form a
powerful coalition is the step that forces employees towards the change in the process. The
vision is created in third step to create the strategy. The vision should be communicated in clear
and concise manner. Empowering others to act on the vision and planning for visible
performance improvement. Using enhanced credibility to change structures and policies. The last
step is building the connections between corporate success and new approaches (Rajan and
Ganesan, 2017).

The theoretical basis, models and practices of SHRM 14
Task 2
Employee Relations
Employee relations refer the relationship between employees and employer that help to make the
healthy environment at work. The nature of employee relationship is complex and including
various influences. It is vital for the company to have the good employee relationship because
conflicts are inevitable in the process (Edwards, 2009). There are so many companies that have
good employee relations such as Netflix, Google, southwest airlines and many more. To decrease
the prospective for issues to escalate, various companies use collective bargaining, grievance
procedures and other ways of employee voices to define different interest.

The theoretical basis, models and practices of SHRM 15
Evaluate theoretical perspectives of Employment Relations with models
There are various theories of employee relations such as unitarist theory, pluralist theory,
Marxist theory.
Unitarist theory
The unitarist theory emphasises the co-dependency of employers and employee. It has been
analyzed that this theory does not in favour of employee relations as it is based on the
assumption that organization is the incorporated group with same objectives and aims shared by
employees. It is necessary for the organization to keep focus on sustaining the loyalty within the
organization. Schools, universities and HK government are some examples of this theory that are
integrated group.
Pluralist theory
Pluralist theory centres on the idea of how power is distributed and focuses the purpose of the
trade unions and management. It is the belief of it to communicate in an effective manner with
employees and focuses on primary functions. It is effective theory to resolve the conflicts within
an organization. It indicates that power is distributed among many groups such as unions,
professionals and associations (Fugate, Kinicki and Prussia, 2008). Airlines are the example of
pluralist theory as it helps to reduce the conflicts and increase the participation of shareholders.
Marxist theory
The Marxist theory focuses on the nature of the society surrounding the organization. It has been
assumed by this theory that the organization remains within an entrepreneur society where
products are owned privately. The main consideration of this theory is to maintain the employee

The theoretical basis, models and practices of SHRM 16
relations between employee and employer. It encourages employee to promote the efficiency of
them. Foxcon electronic company is the example of this theory because it is in constant conflict
that reflecting within society especially between the rich and poor.

The theoretical basis, models and practices of SHRM 17
The Roles of the Actors in ER
The role of the actors within the employment relationship is given below:
Stakeholders
The stakeholders are the major actors in employee relations as they try to meet the needs of
conflicting of the staff and the board and shareholders. The central and state government impacts
and regulates employment relations through laws, agreements, rules and awards of courts. It
involves the third parties and tribunal courts. The role of the Board is to meet the needs of the
stakeholders and ensure the bottom line is profitable.
Labour union or Non-union form
The labour unions make ensures that the employees should be encouraged in effective manner in
which it involves training and development program for employees to get progress. It has been
ensured by union representatives that ER provides huge benefits to employee.
Employees
The employees are the major actors in employee relations as the needs of the employees are to
enhance the improvement in the condition of their employment. The decision making process is
shared by employees of the organization. It is vital for the employees to get aware of the changes
in the organization.

The theoretical basis, models and practices of SHRM 18
The changing nature of ER
The employee relations are changed now and many laws are initiated by Government that being
the cause of fewer strikes and lost working days. Age Discrimination in Employment Act of
1967, Americans with Disabilities Act of 1990 and National Labour Relations Act ("NLRA") in
1935 is some examples of act that are implemented by government to protect the rights of
employees as well as employers. It helps to encourage collective bargaining. There are various
rights of employees that provide power them to refuse unsafe work and to participate in
workplace health and safety activities.
Voice and participation
Employee voice is the concepts of employee participation and employee involvement. It refers
the involvement in the decision making process of the organization (Morrison, 2011). There are
three approaches such as representation, upward and downward communication and
consultation. Representation of employee are considered as the part of the formal structure for
including them in the decision making process (Miles and Mangold, 2014). Upward
communication has the purpose of feedback and it does not occur frequently. Downward
communication is the approach to provide the information with relevant structure. Consultations
help to communicate about the health and safety process to hear the concerns of others and raise
the concerns on the behalf of the company. There are various benefits of employee voice in the
organization such as enhance performance by enhanced job motivation and satisfaction. It helps
to fulfil needs and personal growth. The organization is also getting benefitted due to employee
voice as it increase the productivity of the employee that give better outcomes to the
organization.

The theoretical basis, models and practices of SHRM 19
The participation may fail if line managers are not trained. Employees of the organization are
liable on manager and if manager are unable to provide them right guidance about how to
accomplish the task or increase the productivity, it may lead the organization into adverse
situation (Burris, 2012). As per the case study, Merril Lynch’s organization can grow
progressively due to effective participation of employees in decision making process.

The theoretical basis, models and practices of SHRM 20
Conclusion
It can be concluded that Strategic Human Resource Management is made up of Strategy and
Human Resource Management. Performance management has been described as it is the process
in which employees and the managers of the organization work together to monitor plan and
review the work objective of employee. Along with that it identifies the connection between the
employee’s job description and goals of the organization. Various theories of SHRM and
employee relations have been described in this assignment to provide better understanding about
the concept of them. The case study of Armstrong has been considered and examples of different
companies have been given in various strategies.

The theoretical basis, models and practices of SHRM 21
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