Strategic HRM and Employment Relations: A Comprehensive Analysis

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STRATEGIC MANAGEMENT
HUMAN RESOURCES

Contents
Introduction......................................................................................................................................4
TASK 1............................................................................................................................................4
Relationship between HR and business strategy.........................................................................4
Vertical alignment and horizontal integration.............................................................................5
Models of Strategic human resources management....................................................................7
Theoretical basis of the Harvard model.....................................................................................10
Theoretical basis of the 5 P’s model of SHRM.........................................................................10
Strategic perspectives of SHRM................................................................................................10
HR practices...............................................................................................................................11
Recommendation for the client to design the performance management system......................12
TASK 2..........................................................................................................................................13
The nature and theoretical perspectives of Employment Relations...........................................13
Theoretical perspectives of Employment Relations..................................................................13
Roles of the actors within the Employment Relationship.........................................................14
Changing nature of employment relations.................................................................................15
Recommendations......................................................................................................................15
Conclusion.....................................................................................................................................16
References......................................................................................................................................17

Introduction
Strategic human resource management is the study of connecting the functions of human
resources with the strategic objectives of the firm just to improve or enhance the performance
level. In this the pattern and activities of human resources are linked to an organisation in order
to attain the strategic goals. The main aim of strategic HRM is to motivate and skilled the
employees of the organisation. This helps the company to provide a sense of guidance in wild
environment. The present report is going to cover the relationship between the HR and business
strategy along with the brief description about the horizontal integration and vertical alignment.
The report also includes he theories and models of SHRM along with the strategic perspectives.
Along with this the nature and description about the relations of employee will also be described
in the report.
TASK 1
Relationship between HR and business strategy
In today’s world, there is no line is drawn between the business and HR strategy and the
connection between these two terms can be understood by a successful business owner. The
development of the human capital is very important for the success of the business. Human
resources strategy is including the team, leadership and experts in order to attain the goals of the
business (Noe and et.al. 2017). The relations between the two can be explained in the following
terms, which are outlined below -
Table 1 : Relationship between HR and business strategy
1. Recruitment and selection affects the both term - The selection and recruitment of the HR
department in a business firm is used to make the workforce productive. Producing the
HR strategy for the recruitment an selection of the highly skilled employees can affects

the bottom line of the business firm. Maintain that organisation where the employee can
enjoy their freedom and do the work accordingly will help the business to attain their
goal. As per the views of HR experts, Human resources and human capital is the most
valuable resources of the company.
2. Communications - The managers of the business firm are responsible for achieving the
goal, objectives and target the employees and make them feel that they are important for
the company and responsible for the success of the organisation business strategy
(Cascio, 2015). Apart from this the HR manager is responsible to resolve the problem of
the employees and give their concern to the manager without sacrificing the profitability
and productivity.
Vertical alignment and horizontal integration
These are the strategies of the business which are used by the organisation in order to
associate their current position between the competitors.
Figure 1 : Vertical and Horizontal Integration
1. Vertical Alignment - This is the alignment which is taken for the two different
companies who are doing the business of the similar product but at the different
process of production. The companies are continuing with their business as this was
done before the process of alignment. This is growth strategy which is used to attain

the control on the whole organisation. The vertical alignment is classified into two
forms which are named as forward and backward integration.
Figure 2: Forms of Vertical Alignment (S, S. 2015)
 Forward Integration - This is when the control of the company is towards
their subordinates (distributors) then this can be said as the forward
Integration.
 Backward Integration - This is when the company is having the control
over the superiors (suppliers) then it is said as the backward Integration.
2. Horizontal Integration - This is the integration in which more than two firms are
operating the same business within the similar activity line then this is said as the
horizontal integration. When any organisation decides to expand through the
horizontal integration, then they acquire the same business in the same industry. Most
of the companies are following this integration method in order to enhance their size
of the business, productivity and profitability (Delery and Roumpi, 2017). This
integration also helps to reduce the competition in the market. For example- One of
the small departmental store selects to merge their business with the same but in the
different country in order to gain the high rate of profit.

Table 2 : Comparison Chart of Vertical and Horizontal Integration
Basis of Comparison Horizontal Integration Vertical Integration
Meaning When more than two firms
join their business which is
of the similar production
process along with the
similar product.
When more than two firms
are having the same product
but different production
process.
Figure
Self-sufficiency No self sufficiency Yes there is self sufficiency
Objective This is having the main
objective of increasing the
size of the business.
This strengthening the
supply chain.
Models of Strategic human resources management
There are many models of Strategic human resource management in which two are
defined below -
 5P Model of SHRM - This model of SHRM is the new model of the strategic human
resource management (Akter and et.al. 2016). This model was introduced by Randal
Schuler. This model of SHRM introduces the five P’s of human resources which shows
that how important and strategy link can be. The 5 P’s which are proposed by SHRM are
stated below -

Figure 3: 5P Model of SHRM
The below table is showing the five P’s of SHRM model -
Table 3 : 5P Model of SHRM
Philosophy of
human
resources
Policies of
the human
resources
Programs of
the Human
resources
Practices of
Human
resources
Processes of
human
resources
This is the
study which
defines the
culture and
values of the
business. This
shows that
how the
organisation
treat and value
the
individuals.
This shows
the policies
related to the
business
which are
made for the
issues of the
business and
the HR
programs.
Expressed as
the strategy of
human
resource.
These
coordinate the
efforts of the
people
working in the
organisation
and addressed
the major
business
issues.
This is for the
leadership and
managerial
peoples who
acts as the
role
behaviours ns
motivators.
This is for the
creation and
execution of
the various
activities and
this shows
how the
activities are
carried out.
 Harvard Model of SHRM - The Harvard model of SHRM allows the presence of the
multiple stakeholders within the organisation. These various stakeholders involve the
multiple shareholders like employees, community and the government at large. This

model of SHRM highlights more on the human side of HRM. This model consists of six
components of SHRM. The dimensions which are involved in this model are interests,
stakeholders, HRM policy choices, situational factors, HR outcomes, and the feedback
loop. The output of this model is directly flow into the stakeholders and the organisation.
The recommendation for this model is that while making the HRM policy decisions, the
business manager must consider the four C’s which are named as cost effectiveness,
congruence, competence and the commitment (Li and et.al., 2016). This will help the
managers that the policies which they implement in their organisation will help them to
enhance their commitment of the working of the peoples within the firm. These policies
will help to attract and develop the individuals and can be cost effective in terms of
employee turnover, wages and the risk of employee dissatisfaction.

Theoretical basis of the Harvard model
The Harvard model of SHRM states that there are about six components in this model. The
interest of the stakeholders and the situational factors are affecting the HRM policies. This model
includes the HR activities such as training, recruitment and the reward system, all these policies
of HRM when performed well then this leads to the positive result or outcomes.
Theoretical basis of the 5 P’s model of SHRM
The 5 P’s model of the SHRM requires the five elements which are used to improve the
operations of the organisation. the 5 P’s will help the organisation to enhance the level of the
performance, to ascertain the purpose of the work, to have the precise philosophy, the well-
defined polices and processes, the programs to trained the employees, all these will result in the
best outputs and attain the goals and objectives of the organisation (Post and et.al. 2018) .
Strategic perspectives of SHRM
There are three perspectives of the strategic human resource management, which are outlined
below-
 Universalistic Perspectives - This is the perspectives which mainly focus on the
best practices approaches of strategic human resource management. This provides
us the promotion, security of the employees, training and development sessions,
empowerment, pay with incentive, and high performance, all these ill going to
result in the high productivity and profitability in all across the organisation.
 Contingency Perspective - This perspective focuses to be effective, and the HR
policies of the organisation must be consistent along with different strategic
positions and the high performance of the organisation.
 Best approach - This approach sets the seven best HR practices which leads to
the best performance of the organisation. The HR practices which are listed by
this approach are security of the employees, self-managed teams, selective hiring,
high compensation and reduction of status.

 Resource based View - This is the managerial framework which is used to
ascertain the strategic resources of a firm which can spread to attain the
competitive advantage for the firm. The resources are may be considered as an
input which enable the organisation to carry out the activities.
 Behavioural perspectives - This perspective of SHRM will leads to the
contingency theory. This mainly focuses on the behaviours of the employee as the
mediator between the organisation and the business strategy. The 5 P’s models of
strategic HRM which mainly focuses on the behavioural perspectives by defining
the 5 P’s of SHRM model.
HR practices
There are many HR practices which are defined by the organisation in order to motivate the
employees to perform the best of their knowledge so that the firm can attain the organisation
goals and objectives. The two important Hr practices are mentioned below -
Reward system - In the human resource management, the monetary thing is the sensual matter
in both practical and theoretical perspectives. The payment which is given to the employee of the
organisation on their better contribution or best performance is said as the reward. Remuneration
given to the employee is also plays the important part in the human resource management as this
helps the firm to recruit and select the best and highly skilled candidate (Ardichvili and et.al.
2016). In today’s time, most of the organisations are using the reward as the tool to motivate and
encourage the existing employees to perform their best in order to attain the reward. But due to
the time, this becomes the factor of de-motivation for the other ones.
Performance management - This is the system which is used to evaluate the performance of the
employees in the organisation. The performance of an individual in the firm from the other one is
different and for that only they get rewarded as their performance level is high from the rest of
the employees. There are many aspects in the organisation which evaluate the performance of the
employee such as reward and the feedback from the client. The good feedbacks are always
positive for the employee as this motivates them and by this the performance of the individual
also increases. Performance management provides the opportunity to the individual to have a
view on their skills and the performance. The reward system is playing the crucial role in the

performance management as if the individual has perform well in their field then they are going
to be rewarded with the pay or bonus. The employees who are having the high performance and
best potential are stated on the high position or designation in the organisation. The performance
management must be honest else this will have the negative impact on both the organisation well
as on the individual.
Recommendation for the client to design the performance management system
The suggestions are to be recommended to the client in order to design the performance
management system, they have to follow the six main steps, which are outlined as below -
 Identify the current performance appraisal process - This states that the client
must view that what type of feedback they are giving to their employee in order to
improve their performance so that they get appraisal. By this the employee will get to
know that in what things they are good and in what things they have to work more.
 Identify organisational goals - This is the step in which the client has to tell the
employee to identify their goals so that they must know that how they can reach to
attain the goals of the organisation.
 Self-performance expectations - This is to suggest that the client must sit with each
employee and recognise their performance and acknowledge about the part in which
they are already doing well and encourage them for that so that they get motivated to
do more best of that (Pentyala and Ahmed, 2018).
 Monthly feedback - This is to suggest that the client must identify and monitor each
things and then give the feedback to the employees as per their work and performance
on the monthly basis so that they can get know that where they are laying.
 Evaluate their performance - At this step the client must give rating to the
performance of their employees.
 Set new performance expectations for the next year - The client must re-examine
their organisational goals for the upcoming future.