Strategic Management of Human Resources

This report discusses the concepts, theories, and practices of strategic human resource management (SHRM). It explores the relationship between business strategy and HR strategy, vertical alignment and horizontal integration in HRM, and the theoretical perspectives and models of SHRM. The report also covers specific HR practices of performance management and rewards. Additionally, it delves into the nature of employment relations and the roles of actors within the employment relationship.

Strategic Management of
Human Resources

Executive Summary
Strategic human resource management is a concept in which strategies of human resource
strategies are linked with strategies of organisation. This report will discuss about different
concepts and elements of strategic human resource management. Employment relations refer to
relationship that is shared by employee and employer in a setting of workplace. This report also
has discussed about employment relations and mechanism that can be utilised to improve
employment relations. This report has discussed about different models and theories of strategic
human resource management, that are best fit, best practices and resource based view. This
report also discussed about changing nature of employment relations, that involve what has and
how employment relations have changed.

Table of Contents
INTRODUCTION...........................................................................................................................4
Task 1...............................................................................................................................................4
Relationship between business strategy and the human resource strategy..................................4
Vertical alignment and horizontal integration.............................................................................5
Theoretical basis and models of SHRM......................................................................................6
Strategic perspectives of Best fit/Contingency, Best Practice/Universalist and Resource Based
View, (RBV)................................................................................................................................6
Specific HR practices of Performance Management and Reward...............................................8
Recommendations........................................................................................................................9
Task 2...............................................................................................................................................9
The nature and theoretical perspectives of Employment Relations.............................................9
Roles of the actors within the Employment Relationship.........................................................10
Changing nature of employment relations.................................................................................12
Recommendations......................................................................................................................13
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
Strategic human resource management (SHRM) can be defined as practice through which
organisations link strategic objectives of organisation with human resource and human resource
functions. This also involves improving performance of business and develop organisational
culture that foster innovation, flexibility and competitive advantage. Strategic human resource
involves several concepts and theories that organisation can utilise to strategically manage their
human resources. This report is aimed at informing, structuring debate and enlightening business
leaders with theoretical basis, models and practices of SHRM. Further, this report will promote
understanding of the theoretical basis of SHRM, performance management, and rewards and
management of employee relations. Overall, this report is divided in two parts in which first task
will discuss about different concepts and theories of SHRM and other will discuss about
employment relations and different actors and their role within employment relations.
Employment relation is an important part of human resource management and report based on
human resource will also discuss about employment relations.
Task 1
Relationship between business strategy and the human resource strategy
Business strategy is the strategy on the basis of which complete organisation is operated
and human resource strategy is one through which human resource in organisation is managed.
In order to ensure successful execution of business strategy is important that human resource
strategies are linked with organisational strategy. According to contingency theory it is business
strategy and human resource strategies are strongly linked and related to each other. This means
that as per contingency theory business operations and their success is contingent upon external
and internal factors (Gupta, 2016). As per this approach business strategies are based on external
factors and their success is based on developing internal factors accordingly. Human resources
are internal factors and this expresses relationship between business strategy and human resource
strategy. This theory also states that human resource strategy should be in alignment with
business strategy in order to achieve competitive advantage and increase organisational
performance. Relationship between business strategy and human resource strategy brings

outcomes in form of clear communication and trust within organisation. Employees are linked
with organisational strategy so that they can effectively participate in execution of the business
strategy. This also is related as on the basis of business strategies organisations can create and
develop strategies for talent management. This relationship is aimed at bringing effective results
in terms of effective performance and enhanced financial performance for the organisation by
ensuring effective execution of business strategies.
Vertical alignment and horizontal integration
Vertical Alignment
Vertical alignment is the alignment of strategies in HRM within organisation is alignment
between business and competitive strategies with HRM strategies. This means that under vertical
alignment HR strategies of organisation are linked with organisational initiatives (Han and et.al.,
2019). Vertical alignment is the degree to which HRM practices, roles and contribution are
aligned with the strategic management process of the organisation. This also involves
contribution and alignment of HR strategies in realising vision, mission and strategic objectives
of organisation. This means that vertical alignment is concerned with alignment of HR strategies
and activities with non-HR activities and strategies within organisation.
Horizontal Integration
Horizontal Integration is alignment in different strategies of HR. Horizontal Integration
includes efficiency of HR and congruence between HRM policies and practices and how these
policies and practices are implemented to optimise deployment of human resources. Horizontal
Integration is concerned with how the process and activities of HR department and resources that
are available to human resources are applied to organisational activities and strategic initiatives.

Figure 1 Horizontal Integration and Vertical Alignment of HR Strategies
Above figure explains vertical alignment and horizontal integration of the human
strategies and also outline difference in vertical alignment and horizontal integration (Lin, Hsiao
and Fan, 2020). In order to achieve overall success, it is important that organisation ensure
effective integration in both vertical and horizontal way. This will contribute in linking and
integrating HR strategies with business strategies and also of HR policies with HR practices.
Theoretical basis and models of SHRM
In present competitive business environment, it has become important for all kind of
organisation that they are working designing and developing strategies. For effectiveness of
strategies and their successful execution it is important that HR strategies are also effective and
able to make required contribution. There are different theories developed in context of strategic
human resource management these are-
Strategic perspectives of Best fit/Contingency, Best Practice/Universalist and Resource Based
View, (RBV)
There are different theories and models that have been developed in strategic human
resource management. These theories and models are best fit model of SHRM also known as
contingency model, best practice also known as universalist and resource based view models.
These have been explained as-
Best Practice/Universalist view

This view outlines that there are some practices that every organisation can adopt. This
means this theory acknowledges that there are certain practices and HR activities with help of
these practices any organisation can improve their performance. These practices also enable
organisations to gain competitive advantage regardless of nature and setting of organisation.
Employment security, selective hiring, self-managed teams, high pay contingent, extensive
training, reduction of differences in status are few examples of best practices. As stated by
ŠIKÝŘ, Sekerin and Gorokhova, 2018 these practices can be applied in most organisational
context and practices also implies strong connection between HR practices and organisational
performance, this further requires that management is having high commitment towards success
of the practices in organisation. For example- self managed teams will reduce responsibility of
organisation and will limit it to team members; this will provide time to organisation for focusing
in other activities. Additionally, teams when have all responsibility they work more diligently
and carefully, this contribute in effective results of organisation. This also has an idea that HR
practices in a bundle are internally consistent and interrelated.
Best fit/Contingency view
Best fit is another model SHRM and according to this theory no practice is best practice
and suitable for every organisation. This theory acknowledges that practices of HRM should
integrated to aligned with practices and strategies of the organisation. This means that
effectiveness of HR strategies is contingent upon other factors within organisation. This is why
success of the HR strategies requires firm to effectively undertake vertical integration. For
example, linking human resources and their management with strategic decisions, in which this
practices can differentiate as the strategies differentiates for organisational achievement. Human
resource management should consider that it is important to ensure human resources are capable
of working on organisational strategy hence organisation is having right human resources with
adequate knowledge and capability. This strategy and model outlines two types of fit that are
internal fit ad external fit. External fit refers to HR strategy fit with business strategy. Internal fir
consists, that HR strategies and policies must fit together.
Resource based view

This is another approach in SHRM, resource based view focuses on internal resources of
the organisation rather than external (Ashton, 2018). This means that this is different from best
fit approach in which firm also focuses in external factors and resources. As per this view in
SHRM firm seeks to build a unique bundle of HR practices through which firm can sustain
competitive advantage.
Specific HR practices of Performance Management and Reward
There are different practices that HR can undertake in context of performance
management and rewards. These practices are as follows-
In relation with Performance Management
 Defining and communicating company goals and performance objectives in order to
ensure effective performance.
 Offering frequent performance feedback, this means that when company provide frequent
feedback to its employees they are more likely to be diligent towards their performance.
 Management by objectives as a strategy for performance management, this strategy
focuses on objectives of the firm and linking them with individual performance.
 Setting goals and establishing performance plan for individuals in order to help them in
performance management.
In relation with reward
 Linking rewards with performance to encourage effectiveness in performance of
employees. This is because when rewards are linked with performance of employees in
order to gain rewards they will make best efforts in their performance which will enhance
their performance.
 Ensuring rewards are valuable for employees, this means that when rewards are valued
by and valuable for employees, only then they will motivate and encourage individual to
perform better and gain rewards.
 Creating a balance of monetary and non-monetary rewards, this is because it is important
that employees are offered with something that they value. It is not necessary that every
employee seeks monetary reward neither every employee seeks non-monetary rewards,
creating a balance will help for both kind of employees.

Recommendations
Performance management system is a system in which organisations undertake practice of
linking performance objectives and goals with organisational objectives. It is important to
develop effective performance management system in order to effectively attain organisational
objectives.
In order to ensure that performance is effectively managed employees in organisation should be
made aware of broad organisational objectives, this will help them in identifying how their
performance will contribute in achievement of organisational objectives which will contribute in
their motivation.
Defects in performance management should be identified and worked before it negatively affects
performance. These defects can be management hostility, staff hostility, alck of follow-up etc.
Adaptation of a management by objectives (MBO) system can contribute in organisational
change and development (White, 2016). This system is aimed at improving performance of the
organisation by clearly defining objectives that are developed by management but are agreed by
employees. This is based on the belief that employees are required to achieve objective and
perform and this is why their consent is important. Another belief is that when employees
actively participate in determination of goals in such situation they will willingly participate in
organisation and achieve their agreed performance objectives.
Task 2
The nature and theoretical perspectives of Employment Relations
Employment relations can be defined as legal relationship between a employee and
employer. This relationship exists when individual is giving their services in exchange of certain
remuneration that is provided by employer. This employment relation creates a relationship in
employee and employer in which reciprocal rights and obligations are created on legal basis.
This means that those rights for employee are obligation for employer and those obligations for
employee are rights for employer. This relationship is formalised and systemised on the basis of
employment and labour law and social security. This law and regulations play important role in
continuing and terminating employment relationship between employee and employer.

Employment relations play important role in engagement and satisfaction of the employees in
their workplace. This requires that employers are following all kind of employment regulations
and employees are able to exercise all their rights and are also facilitated to execute all their
responsibilities (Kim and Bae, 2017). There are different theories that have been developed in
context of employment relations. These theories are-
Unitary Perspective
This theory assumes that employer and employee work in teamwork for attainment of
common objectives. Organisation as per this perspective is considered as unit in which employee
and employer have equal understanding. This means that in this perspective there is no need of
third party or union intervention and unions in this approach is considered unnecessary.
PluralistPerspective
This approach or theory in employment relations considers that organisation is a group of
individuals and groups with different objectives, values and interest. This means that every
individual in organisation is competitive in terms of leadership, authority, and loyalty. This
always create a situation of conflicts through which organisation is in a situation of dynamic
state.
Marxist/Radical perspective
This is another theory in employment relations and according to their theory conflict will
always be there in employee and employer because of their basic disparities (Van Buren III,
2020). This theory outlines that there will be a situation in organisation in which employee and
employer are always against each other’s as two distinctive groups. This opposition is because of
underlying interest between capital and employees. This means that interest of employees is
different and interest of capital (employer) is different and this creates a situation of conflict.

This means that whether employment relations are based on different laws and
regulations there are different theories that explain and outline nature of relationship that is
shared by employee and employer in a workplace.
Roles of the actors within the Employment Relationship
Employment relationship is a relationship between employee and employer but there are
more participants in this relationship. Actors in employment relationship and their roles are as
follows-
Employer/Employee Union
Employee is one of the most important actors within employment relationship and
without employee no employment relationship can be created (Fudge, 2017). Role of employee
in this relationship is-
 Role of employee is to complete all the activities and functions for which employee has
been hired in an organisation. This means fulfilling duties and responsibilities of
employee within their job role.
 Meeting standards of performance where applicable
 Adherence to code of conduct of the organisation this means following all the rules and
regulations within an organisation
 Ensuring safety of organisational assets against waste, loss, unauthorized use and
misappropriation
 Following teams and team norms when working in team within organisation
 Exercising reasonable and lawful rights within organisation
 Sharing their concern with management and seeking for redressal of their grievances
Employer/Organisation
 Ensuring adherence to all policies and regulations for employment and employee safety
 Paying adequate wages and salaries to all employees within organisation

 Motivating and encouraging employees to perform to their best capacity and gaining their
trust
 Improving overall efficiency by maintaining flow of communication within organisation
on regular basis
 Ensuring training and development of employees and also ensuring equality within
organisation among employees
 Listening to and dealing with problems of employees and trade unions (Leonardi and
Gottardi, 2019)
 Negotiating terms and conditions of employment with employees and trade unions
Government
Government is another important actor within employment relations. Role that
government plays in a employment relations is as follows-
 Safeguarding interests of both party’s employee and employer (this communicates that
whatever rules and regulations are developed by government they should ensure that both
employee and employer get benefit from that)
 Ensuring adherence to regulations by both the parties (this involves that both employee
and employer are required to follow laws and regulations. In case any party does not
follow to regulations legal actions should be taken for both parties)
These are primary parties other than this some parties are-
Courts and Tribunals
 Role of this party includes-
 Ensuring resolution of conflicting judgment
 Judicial review to administer the justice of constitution
 Also eliminate
 Judicial flaws
 Conflicting judgment

Changing nature of employment relations
From the starting and systemization of employment relationship, its nature has
significantly changed (Lansbury, 2018). There are different reasons for that including enhancing
and increasing voice of the employees. Changing nature of regulations and changing approaches
for engaging employees in organisation are other reasons for changing nature of employment
relations. Changes in labour market and standards of employment made significant impact on
employment relations. This means that increasing number of administrative and white collar jobs
have made significant impact on employment relations. In this requirements of employees
changed and that were more than just pay and compensation. These changing requirements
brought changes in employment relations. Workplace safety and maintains providing an safe and
suitable workplace became essential for both effective performance of employees and for
following regulations. Employee satisfaction became important norm for all kind of organisation
and this contributed in emergence of several new concepts flexible working is an example of
that. Such elements also made an impact on overall employee relations. Further requirement of
technology-savvy workforce required adapting to more changes and this also made impact on
employment relations. Above discussion suggests that there are several reasons which changed
employment relations. In this psychological contract became important element of employment
relations. Psychological contract is a set of promise and expectation that are exchanged between
parties in an employment relationship. This contract is tacit and implicit unlike formal contract.
Recommendations
On the basis of above discussion, it can be said that effective mechanism for participation
and voice of employees can play important role in enhancing and improving employment
relations (Markey, McIvor and Wright, 2016). Some of recommendations for mechanism of
employee participation and employee voice are as follows-
Suggestion Schemes
This is one of the mechanism through which employees are encouraged to come up with
new ideas. These ideas are regarding enhancing value in existing practices within organisation.
This includes matters such as cost cutting, safety measures, reward systems are some of the
matters that are included in this. Employees on the basis of their different ideas and their value
are then rewarded with different monetary and non-monetary rewards.

Involvement mechanism
Developing different mechanism through which employees can participate in organisation these
are-
Suggestion Box
This is concerned with placing a suggestion box in which employees can share their
ideas. This will encourage employees to share their ideas and these are later evaluated by
authorised people to ensure their utility in organisation.
Ideas campaign
This means placing boards in every department and promoting an idea campaign
(Prouska and et.al., 2019). This is aimed at keeping employees engaged and ideas shared by
employees contribute in effective running of business and its operations.
Attracting ideas through online channels
This is another mechanism through which employees can share their ideas on online
mediums and channels that company employs. Many of the organisations presently are using this
as technology has become key element of organisational operations.
Employee Engagement
This is a practice in which organisations require to employ employee engagement
practices. This will enable employees to participate in their job role and they will be able to raise
their voice and participate in organisation.
Team working Initiatives
This is another mechanism under which employee will be able to participate while
working in a team. Employing team working initiatives will enable and encourage employees to
participate in team affairs within organisation.

CONCLUSION
On the basis of above discussion, it can be concluded that strategic human resource
management and its approaches can make effective contribution in realising strategic objectives
of organisation. This helps in linking human resource strategies with organisational strategies
and initiatives. Report discussed different concepts and elements in context of strategic human
resource management in which vertical and horizontal integration were discussed to integrate
different strategies. Different models were discussed for strategic human resource management
and organisations according to their nature and capability. Later, this report discussed about
employment relations and effective and harmonious relations play important role in overall
success of the organisation.

REFERENCES
Books and Journals
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institutional economics and old power resource theory. Journal of Industrial
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Gupta, M., 2016. An empirical study on fit between strategic human resource management and
business strategy. International Journal of Management Research and Reviews. 6(2).
p.102.
Han, J.H and et.al., 2019. The goldilocks effect of strategic human resource management? Optimizing the
benefits of a high-performance work system through the dual alignment of vertical and
horizontal fit. Academy of Management Journal. 62(5). pp.1388-1412.
Jiang, K. and Li, P., 2019. Models of strategic human resource management. Sage handbook of
human resource management. pp.23-40.
Kim, D.O. and Bae, J., 2017. Employment relations and HRM in South Korea. Taylor & Francis.
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institutional perspective of the future. Labour & Industry: a journal of the social and
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Leonardi, S. and Gottardi, D., 2019. Why no board-level employee representation in Italy? Actor
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Lin, J.C., Hsiao, W.W.W. and Fan, C.T., 2020. Transformation of the Taiwan Biobank 3.0:
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Prouska, R and et.al., 2019. Employee participation and representation in Central and Eastern
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Van Buren III, H.J., 2020. The value of including employees: a pluralist perspective on
sustainable HRM. Employee Relations: The International Journal.
White, G., 2016. Reward management. Edward Elgar Publishing Limited.

ŠIKÝŘ, M., Sekerin, V. and Gorokhova, A., 2018. Managing Human Resources Using the Best
Practice. Best Fit Approach. Journal of Applied Economic Sciences. 13(1).
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