Strategic Hrm

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Strategic Human Resource Management

Strategic Human Resource Management


The field of HR strategy differs from traditional HR management research in two important ways. First, SHRM focuses on organizational performance rather than individual performance. Second, it also emphasizes the role of HR management systems as solutions to business problems (including positive and negative complementarities) rather than individual HR management practices in isolation. But strategic means more than a systems focus or even financial performance. Strategy is about building sustainable competitive advantage that in turn creates above average financial performance. The simplest depiction of the SHRM model is a relationship between a firm's HR Architecture and firm performance. The HR Architecture is comprised of the systems, practices, competencies, and employee performance behaviors that reflect the development and management of the firm's strategic human capital. Above average firm performance associated with the HR Architecture reflects the quasi rents associated with that strategic resource (MacDuffie, 2005).

For the most part prior SHRM theory has focused on the nature of the HR Architecture. What is the nature of the appropriate HR system (i.e. single practices or systems)? What are they key mediating variables (i.e. commitment) within the HR Architecture? The architectural metaphor (Becker and Gerhart, 1996; Becker and Huselid, 1998, Lepak and Snell, 1999; Wright et al., 2001) is important because it highlights the locus of value creation in SHRM. While strategic human capital is reflected in the 'human' assets in the organization, it is created and managed through the organizational system reflected in the HR architecture.

Discussion and Analysis

Our proposal to refocus SHRM theory on strategy implementation, and by implication strategic business processes, also suggests both a new emphasis and a new focus for fit in the empirical SHRM literature. If these strategic business processes or their underlying activity systems are differentiated across firms and within firms, then HR architectures should be equally differentiated.

Locating strategy implementation as the locus of fit has direct implications for notions of external and internal fit. Internal or horizontal fit (among the elements of the HR architecture) and external fit or vertical fit (between the HR architecture and a strategic business process) are no longer independent constructs. First, internal fit should have no value in the absence of external fit. A highly integrated, mutual reinforcing system of HR practices, all of which do little to improve strategy execution, will have little strategic value. Second, if the HR architecture, and by ...
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