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SHRM Summary Lectures
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Summary of all the in-person and video lectures of the course Strategic HRM.
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Strategic HRMVideo Lecture 1 - HRM: What and Why?
Human Resources = Characteristics that are intrinsic to human beings, which people can apply to the
various tasks and challenges of their lives.
- Our Knowledge, Skills and Abilities (KSAs)
- Our physical and emotional health, motivations, intellectual capabilities, and personalities
that underpin our KSAs
Who owns Human Resources? → Individuals possess their own human resources and have rights
over how and where they use their KSAs.
2 implications:
1. Individuals themselves choose how and where to deploy and develop their human resources
and self-manage their work-life balance
2. Organizations are dependent on people who have the human resources they need to be
successful. Thus, HRM is an inevitable process in organizations.
Human Resource Management (HRM) = HRM is the process through which managers attempt to
build a workforce with the kind of human resources the organization needs and create the kind of
human performances that will make it successful.
Thus:
- HRM is a management activity concerned with building a workforce to achieve organizational
goals.
- Managers design and use HRM systems to manage work and employ people.
HRM systems = are bundles of HRM policies and practices (HRM models)
HRM policies and practices for work management:
- Work design (low discretion jobs (callcenter) to highly autonomous jobs (managerial work))
- Design and implementation of teamwork in team setting
- Design and implementation of organizational change
HRM policies and practices for people management:
- Workforce planning, recruitment & selection, training & development, performance
management, compensation, incentives, retention.
,Who are involved in HRM?
1. Senior management is responsible for:
- Aligning HRM with organizational goals and strategy (vertical fit)
- Aligning HRM with other functional areas (M, P, F; horizontal fit)
- Aligning HR policies and practices with one another (internal fit)
- Involving other stakeholders (line managers, employees) in HRM process
2. Line management:
- Line managers implement and use HRM practices to hire, develop, motivate, reward, and
retain employees.
3. HR specialists:
- Support top managers to design and align HRM with overall strategy.
- Support line managers to implement HR policies and practices.
4. Employees:
- Develop perceptions of HRM policies and practices
- Receive, utilize, and negotiate HRM policies and practices.
What roles do HR specialists fulfill? – Ulrich’s Four-Role Model
X = processes vs. people
Y = operational focus vs. strategic focus
What are the goals of SHRM?
1. Economic goals
- Cost-effective labor
- Organizational flexibility
- Human resource advantage
Cost-effective labor:
- HRM needs to secure the economic viability of the firm (making a profit that investors and
lenders consider acceptable)
- Thus, a fundamental economic goal of HRM is making human resources productive at
affordable cost.
,Organizational flexibility:
1. Short-run responsiveness
- Numerical flexibility (e.g. overtime, temporary/zero-hours contracts)
- Financial flexibility (e.g. mix of wages, performance-based bonuses)
- Functional flexibility (e.g. cross-trained or multi-skilled employees)
2. Long-run agility
- Capacity to create endurable changes to cope with radically changing environments (e.g.,
offshoring production facilities → HRM model for dual workforce)
- Long-run agility is difficult to achieve because established thoughts and routines in
organizations are hard to change (Carroll & Hannan, 1995)
Human Resource Advantage:
Firms that survive (economic viability) try to develop a competitive advantage to enhance their
profitability.
Competitive advantage = a company uses its resources in such a way that it performs at a higher level
than its rivals. Two ways (Michael Porter):
- cost advantage: providing products and services at lower costs than its rivals.
- differentiation advantage: providing better products and services than its rivals.
Most competitive advantages are temporary (e.g., offshoring production)
Competitive advantages are most valuable when they are sustainable (e.g., innovative ecosystems for
products and services through which Apple, Amazon, Google, Facebook, and Tesla have redefined the
business and industry they operate in)
HRM plays a pivotal role in developing competitive advantages through building human capital
advantage and social capital advantage.
- Human capital advantage = firm attracts, hires, develops, motivates, and retains more highly
talented employees (better KSAs) than its rivals.
- Social capital (or organizational process) advantage = firm develops superior ways of
combining the talents (KSAs) of individuals into collaborative activities leading to competitive
advantage and excellent organizational performance.
Elite models of HRA when: low-skill products and services, firms invest only extensively in the human
capital and social capital of their elite (i.e., management, marketing, and supply chain experts; elite
HRA) and employ the operating workforce in cost-effective ways
Egalitarian models of HRA when: high-skill products or services, firms invest extensively in the human
and social capital of the entire workforce (i.e., egalitarian HRA) to ensure the delivery of high-quality,
highly-priced products and services to their customers.
2. Socio-political goals
- Social legitimacy
- Managerial power
, Social legitimacy:
Firms are not only economic but also social actors operating in societies: managers need to adapt
their HRM to legal requirements and social values and norms relating to how people should be
employed and treated at work.
Institutional perspective: 3 pillars of institutions:
1. Regulative: labor laws and legal rules
2. Normative: social values and norms (equal employment opportunitiesm, inclusion)
3. Cultural-cognitive: how people think and behave in a society
Employers differ in their social legitimacy goals:
- Some employers try to avoid their legal responsibilities (e.g., underpayment of staff, breaches
of health and safety at work).
- Most employers tend to adopt a baseline legitimacy goal to avoid prosecution and bad
publicity.
- Some employers operate beyond the baseline by actively promoting equal employment
opportunities (EEO) and worklife and family-friendly employment conditions.
Managerial power:
Managers use HRM to enhance their power as stakeholders, enabling them to provide a firm with
leadership, direction, and coordination.
Power-seeking behavior can become perverse (Williamson, 1964)
Agency theory (Jensen & Meckling, 1976; Lazear, 1999) - managers are active agents who can pursue
their short-term interests at the expense of the firm’s long-term interests:
- Exorbitant bonus payouts to banking executives.
- Trend to financialization – managing managers through short-term pay-for-performance
schemes.
- Ratio between CEO and average U.S. workers pay of 347 to 1.
Summary of the goals of SHRM:
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