Strategic HRM: Implications of Strategies and Performance Culture

This report delves into the realm of Strategic Human Resource Management (SHRM), examining its multifaceted implications and the critical role it plays in organizational success. It begins by defining SHRM as a strategic approach that aligns human resource practices with the overall objectives of the organization. The report then explores the implications of connecting human resource strategies with the strategic objectives, emphasizing the importance of human resource planning, recruitment, selection, training, development, performance management, and compensation systems. Furthermore, the report underscores the significance of a performance-oriented organizational culture in fostering innovation and competitive advantage. It discusses the Schein's model of organizational culture and highlights the need for continuous innovation in today's dynamic business environment. The report also examines strategic recruitment and selection, along with strategic compensation, to motivate employees to align their behaviors with the goals of the organization. Ultimately, the report provides a comprehensive overview of how SHRM can drive organizational performance, innovation, and sustainable competitive advantage.

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Strategic Human Resource Management 1
Table of Contents
Introduction......................................................................................................................................2
Strategic Human Resource Management.........................................................................................2
Implications of Linking the Human Resource Strategies with the Strategic Objectives of
Organization....................................................................................................................................3
Role of Performance Oriented Organization Culture in Fostering Innovation and Competitive
Advantage........................................................................................................................................6
Conclusion.....................................................................................................................................12
References......................................................................................................................................14

Strategic Human Resource Management 2
Introduction
Strategic human resource management is made up of two terms, namely, strategy and human
resource management. It is a multidimensional policy, which is the utilization of the human
resources in the best manner. SHRM is the process of strategically utilizing the human resources
of the organization, so that the overall productivity of the organization can be enhanced. It aligns
the human resource of the organization with the strategic objectives of the organization. As a
result, most of the organizations have focused on linking the objectives and goals with the
strategic goals of the organization. The present report discusses the implications of connecting
human resource strategies with policies and the strategic goals (Varbanova, 2013). HR strategies
of the organization are responsible for developing performance-oriented organization culture,
which can enhance the innovation capabilities of the organization and develop the competitive
advantage of the organization.
Strategic Human Resource Management
In the present times, competition among the business organizations is intense; therefore, it is
important that these organizations pay attention to achieve the long-standing objectives of the
organization. It can be stated that the primary goal of the human resources of the company is to
make the employees productive so that the organization can easily achieve its goals. Strategic
human resource management emphasizes on both individual goals and organizational objectives.
The strategic human resource of an organization emphasizes on HR areas, in which HR
strategies are designed considering the long-term goals of the organization. The SHRM
(Strategic Human Resource Management) emphasizes that there exists a relation between HR
policies, practices, and the overall goals of the organization. It also states that HR intervention

Strategic Human Resource Management 3
can easily sort out disputes and conflicts in the organization (Mello, 2014). There are two
fundamental principles of SHRM, which are promoting HR activities in the organization, which
can enhance employee performance and linking the HR activities with the financial goals of the
organization.
Connecting Human Resource Strategies with the Strategic Objectives of
the Organization
In present competition, traditional support services such as HR management, administration, IT
and legal services are under increased pressure to directly impact the business results. Both
public and private organizations are under the pressure of the customers, management, and
investors to optimally utilize the business resources. HR managers can support the business
objectives of the organization by linking HR with the goals and objectives of the organization.
The business strategy is an articulated plan, which assists the organization in making optimal use
of human resources and investment. It is an understanding that HR function can be used as a
strategic partner to develop and implement the strategies, which can improve business
performance and nurture innovation, flexibility and competitive advantage of the organization.
The strategic orientation of the organization is important irrespective of the size of the
organization. Strategic orientation refers to the action plan of the organization to align HRM with
the business objectives. The business organizations can create a competitive advantage through
skilled, committed and motivated workforce.
Human resource planning refers to the process of analyzing future human resource needs of the
organization so that the organization can achieve its objectives in an efficient manner. The
human resource planning is essential for an organization so that lead time between the
recognition of a new job post and filling that requirement is reduced. Therefore, HR manager

Strategic Human Resource Management 4
should have knowledge of the job market and the availability of talented candidates. Over the
years, the process of HR planning is changed and it has moved from the traditional hiring and
recruiting to forecasting and succession planning (Barrick, Thurgood, Smith & Courtright,
2015). Human resource planning can reduce the employee turnover by attracting them with the
career opportunities present in the market.
The core function of the recruitment and selection department is selecting best-fit candidate from
the pool of the talented candidates. In the previous times, recruitment was considered as a
traditional function, in which the focus was on finding a right person, who is fit for the role.
However, not with strategic HRM, the companies are focusing on the person-organization fit,
which means they are evaluating whether the applicants can be integrated with the culture of the
organization. High performing organizations emphasize on the use of training and development
to increase the competitive advantage of the organization. Training and development is an
essential part of the business organization, which can grow value and potential of the people.
With training and development, business organizations can transfer the existing knowledge,
skills and abilities which are essential in completing specific task or activities. Training and
development promotes the goals and objectives of the organization (Kramar, 2014). The strategic
training and development of the organization are more targeted, measurable and effective.
The traditional performance management system fails to deliver the business objectives as the
business objectives of the organization are not always understood, which creates mismatch
between the corporate strategy and its impact on the performance management of the team.
Moreover, if the goals and the strategies of the business and the employee motivation and the
culture are not ideal, it may impact negatively on the results of the organization.

Strategic Human Resource Management 5
The strategic performance management approach can be used to manage the performance of the
employees, to motivate the employees to achieve their targets, and assist the managers and the
employees to work towards achieving these targets. Strategic HR management is an effective
method in managing performance; developing selection and recruitment capabilities to establish
a performance evaluation plan, which can be used for achieving strategic goals. The
compensation system of the organization can be linked with the performance of the firm. It is
beneficial in retaining the employees with the required competencies (Jackson, Schuler & Jiang,
2014). The strategic performance management of the organization is focused on delivering
effective results according to the business strategy.
The compensation and reward structure are crucial factors in recruitment and the retention of the
best talent in the industry. As a result, a large number of organizations are finding it challenging
to retain the top talent of the industry. The company can design an efficient compensation
structure by identifying the employee objectives and the motivation of the employees, while
determining the compensation structure (Kramar, 2014). The older employees of the
organization are concerned about retirement and healthcare benefits. However, the new
employees might want paid time-offs and different opportunities for growth.
Therefore, it is important that the compensation and the reward programs are strategically
designed. The performance rewards are both financial and non-financial and; therefore, they
should reinforce the performance outcomes and evaluate the contribution of the employees for
the organization. Several tactics such as bonus, incentive pay, variable compensation, and
performance linked pay are best methods to enhance the performance of the employees. It
increases the competency and the competitive advantage of the organization (Swart, Hansen &
Kinnie, 2015).

Strategic Human Resource Management 6
Role of Performance Oriented Organization Culture in Fostering
Innovation and Competitive Advantage
According to Naranjo Valencia, Sanz Valle & Jiménez Jiménez, (2010) the organization
innovation has significant benefits on economic development and enhancing the competition in
the business organization. In the present era of complex and dynamic conditions, the need for
business organizations to innovate continually has become extremely necessary. The Schein’s
model of organization culture states that the culture of the organization develops from the values
of the organization, which are communicated through norms, policies, and the changes in
behavioral patterns. With the emphasis on certain values and development of norms, companies
can create a compelling employee behavior.

Strategic Human Resource Management 7
Figure: Model of Organization Culture
(Source: Hogan and Coote, 2014)
The innovation theory is developed for the manufacturing industry and innovation is developed
as a discrete paradigm. The innovation can be different such as incremental or radical process. In
the manufacturing industry, the output of innovation capabilities is tangible. It results in the
manufacturing of products, which are produced through technological innovation and they are
stored so that they can be used later. The development of new machinery is dependent on
innovation capabilities of the organization. The success of the human resource planning is based

Strategic Human Resource Management 8
on establishing relations between the HR office and the direct managers of the organization. It
empowers the organization in meeting the goals, objectives and consistencies. The succession
planning is the process in which the organization recruits talented employees within the
organization; and then, develops their skills, knowledge and professional capabilities.
The innovation behavior of the organization emphasizes client-focused, technology-focused and
marketing-focused innovation capabilities. However, it is not an effective conceptualization for
the service industry because services are perishable and does not hold value at a later point of
time. In the service industry, close interaction between the producers, service, users and the
service delivery process increases the challenge between the product and process innovation. The
knowledge and the innovation are intangible in nature, and the innovation is not necessarily
based on the physical and the technological aspects. The strategic training and development is
the process of developing and designing the training programs so that the employees can achieve
superior performance. It can be used to uplift the innovation capabilities of the organization.
In the views of Naranjo-Valencia, Jime´nez-Jime´nez and Sanz-Valle (2011), in present, business
organizations are facing different challenges due to the changes in the business environment.
These complex changes demand changes in product architecture, firm competencies and
technological developments.
Therefore, the innovation capabilities of the organization are successful for its presence and
innovation. The organization culture of a business enterprise can be categorized as innovation
orientation and imitation orientation of the organization. The innovation orientation refers to the
organization culture in which the organization pursues innovation and new product or services
before the company’s competitors introduce them. In contrast to it, the companies with imitation

Strategic Human Resource Management 9
orientation try to escape from the research and development cost pertaining to the development
of novel technologies and scientific investigation. Therefore, they try to easily adopt the ideas
and technology of the organization’s competitors. Most of the public know the innovation
orientation as the new market entrants. They are also called as new market entrants or the market
pioneers. In contrast to it, the companies with the imitative orientation are known as late market
entrants or business followers (Shavinina, 2003). Innovation capabilities require choosing the
right candidate for the organization. In the strategic recruitment and selection, the companies
translate the strategic objectives of the organization into HR demand and needs so that
appropriate selection and recruitment can be conducted. The strategic recruitment and selection
aligns the objectives of the candidates with the objectives of the business enterprises (Jackson,
Schuler & Jiang, 2014). However, the strategic recruitment emphasizes on filling the key job
positions of the organization.
It can be stated that the innovation capabilities of the organization are the basic of the market
entry strategy. Along with it, other factors such as product advantage, promotional efforts and
the relative price of the product are important in establishing a competitive advantage of the
firms. Another important factor in the development of the competitive advantage is the timing of
the market entry. The timing of the market entry cannot be determined statistically. It is
qualitative decision making and mainly depends on the strategic decision of the organization
(Subramanian, Rahe, Nagadevara, & Jayachandran, 2016). The strategic decisions require
strategic planning. The strategic plan of the organizations is designed for three, five or ten years.
However, compensation strategies and performance incentives are based on the annual
compensation and bonus; however, linking them with the compensation can boost the

Strategic Human Resource Management 10
performance of the organization. The strategic compensation of the organization can motivate
the employees to align their behavior and job performance with the goals of the organization.
The organization culture has a positive connection with the innovation capabilities of the
organization. It means that in order to innovate and align with technological progress in an
effective manner, there should be some specific internal and external characteristics in the
organization culture of the business enterprise. The organization culture is the facet of the
operational competency, which shows the inclination of the firm towards innovation.
The organization culture is nothing, but the values, beliefs and the hidden assumptions of the
different stakeholders of the organization, which reflects on the orientation of the organization. It
fosters the development of the innovation capabilities of the organization. The primary reason for
it is that it stimulates innovative behavior among the members of the organization. The different
members of the organization accept that innovation is the core of the organization operations,
and it can be used to enhance the innovation commitment to the organization. Further, the
organization culture and management behavior are strongly linked and can foster change in the
organization (Carayannis, Varblane & Roolaht, 2011).
The organization culture has two types of effect on the innovation process of the organization. It
increases the innovation capabilities through socialization and coordination. With socialization,
the employees can understand that innovation and creativity are part of the business operations.
The different stakeholders of business organization can coordinate and support innovation
through different activities, policies and procedures. It can generate value, which will fund
innovation and creativity. The integration of these values will eventually improve the innovation
capacity of the organization.

Strategic Human Resource Management 11
The Competing Values Framework (CVF) is an organization culture model proposed by
Cameron and Quinn, which is extensively used to define the organization culture of the business
enterprises. These authors define that there are two cultures in the organization, which are
adhocracy, set, market and hierarchy, which can be characterized by two characteristics. There
are two dimensions, namely, flexibility and control. Other than that, the external focus and
internal focus and the incorporation of these values in the organization culture is important.
There are certain characteristics, such as organization leadership, employee management,
emphasis of strategy is the major characteristics of the organization culture.
According to this model, in adhocracy culture, the organization culture is dominated by change
and flexibility. It is externally oriented culture. This type of culture is common in companies,
which operates in the dynamic market. These companies are leader in their respective industry or
try to become one. Such types of organization culture enforce creativity, entrepreneurship and
risk taking ability of the organization. The clan culture is a similar kind of culture, which focuses
on teamwork, employee involvement and commitment of the employees towards the
organization (Holt, 2013).
The market culture is another type of culture, which is concentrated on the external environment;
also stresses on control within the organization. The culture has the main characteristics of
productivity and high competitiveness. The last is the hierarchal organization culture. In this
culture, the organization emphasizes on establishing control on the internal and external parts of
the organization. The main dimensions of organization culture are efficiency, coordination and
close adherence to the culture of the organization. These different characteristics of the
organization form the innovation capabilities of the organization. Flexibility-oriented cultures
have a positive impact on the probability of innovation within the organization. Flexibility,