27  Strategic Role of Human Resource Management

27.1 What is Strategic HRM?

Strategic Human Resource Management (SHRM) is the linking of human-resource management with the strategic goals of the organisation to improve business performance and develop an organisational culture that fosters innovation, flexibility and competitive advantage. The shorthand: HRM is no longer the order-taker of the business plan — it is a co-author of the plan.

Patrick Wright and Gary McMahan’s foundational definition (1992): SHRM is “the pattern of planned human-resource deployments and activities intended to enable the firm to achieve its goals”.

TipWorking Definitions of SHRM
Author Definition Foregrounds
Wright & McMahan (1992) “Pattern of planned human-resource deployments intended to enable the firm to achieve its goals.” Pattern, intent
Gary Dessler “Formulating and executing HR systems that produce the competencies and behaviours the firm needs.” Formulation + execution
Aswathappa “Macro-organisational approach that views human resources as a strategic asset.” Strategic asset
Armstrong “An approach to making decisions on the intentions and plans of the organisation concerning employment relationships and its recruitment, training, development, performance management, reward, and employee relations.” Coherent intentions
Boxall “The combinations of human-resource practices that managers use to achieve goals.” Practice bundles

27.2 SHRM vs Traditional HRM

TipSHRM vs Traditional HRM
Feature Traditional HRM Strategic HRM
Approach Reactive, transactional Proactive, strategic
Time horizon Short-term Long-term
Decision-making Operational, individual issues Integrated with corporate strategy
Locus HR department Line managers + HR
Linkage with strategy Loose, after-the-fact Tight, designed-in
View of employees Cost Asset / Investment
Performance measure Activities (hires, training hours) Outcomes (HR Scorecard, business impact)
HR director’s role Functional specialist Strategic Partner

27.3 Why SHRM Matters

TipDrivers of the rise of SHRM
  • Knowledge economy — people are the source of competitive advantage.
  • Resource-Based View (Barney 1991) — VRIN resources include people.
  • Globalisation — talent must be sourced and managed across borders.
  • Technology and digital transformation — continuous reskilling needed.
  • Demographic change — ageing workforces (developed), young workforces (India).
  • Stakeholder pressure — ESG ratings include people-management metrics.
  • War for talent (Chambers et al., McKinsey 1998) — talent scarcity.
  • CEO accountability — CHRO often reports to and is evaluated by CEO.

27.4 Three SHRM Approaches

TipThree approaches to SHRM
Approach Author Claim
Best-Practice / Universalistic Jeffrey Pfeffer (1998) Some HR practices work everywhere
Best-Fit / Contingency Schuler & Jackson (1987) HR practices must fit business strategy
Configurational Delery & Doty (1996) Bundles of mutually reinforcing practices fit each strategy

27.4.1 Best-Practice — Pfeffer’s Seven HR Practices

TipPfeffer (1998) — 7 HR practices for competitive advantage
  • Employment security
  • Selective hiring
  • Self-managed teams and decentralisation
  • High compensation tied to performance
  • Extensive training
  • Reduced status distinctions
  • Sharing financial and performance information

27.4.2 Best-Fit — Schuler-Jackson Strategy-Specific HR (1987)

Each Porter generic strategy demands a different employee role and HR profile (see Topic 23).

TipSchuler-Jackson — strategy-driven HR
Porter strategy Required employee role HR emphasis
Cost Leadership Repetitive, predictable Tight JDs, short-term, narrow training, low investment
Differentiation (Quality) Process-quality, customer-oriented Quality circles, broad-skill, process control
Innovation Creative, risk-taking Loose JDs, broad skills, long-term, high investment

27.4.3 Miles-Snow Strategic Typology

Raymond Miles & Charles Snow (1978) classified firms into four strategic types:

TipMiles-Snow’s four strategy archetypes
Type Posture HR implication
Defender Stable; protects existing niche Build skills internally; long tenure
Prospector Innovative; new markets Recruit ready talent externally
Analyser Hybrid Mix of build + buy
Reactor No clear strategy Inconsistent HR

27.5 Models of SHRM

Recap from Topic 23 — six SHRM models worth knowing:

TipMajor SHRM models
Model Author Year Idea
Michigan / Matching Fombrun-Tichy-Devanna 1984 HR cycle: Selection → Appraisal → Reward → Development (Hard)
Harvard Model — 4 Cs Beer et al. 1984 Stakeholders + Situation → HR Policies → 4 Cs → Long-term outcomes (Soft)
Guest’s Model David Guest 1989/97 4 HR goals + 4 outcomes
Warwick Model Hendry-Pettigrew 1990 Inner + outer context drive HR strategy
5-P Model Schuler 1992 Philosophy · Policies · Programmes · Practices · Processes
Ulrich’s HR roles Dave Ulrich 1997 4 roles: Strategic Partner · Change Agent · Admin Expert · Employee Champion

27.6 HR-Strategy Linkage — Four Levels

Golden, Ramanujam (1985) identified four levels at which HR can link to strategy:

TipHR-strategy linkage — four levels
Level Linkage Description
1. Administrative None HR is paperwork; strategy ignores HR
2. One-way (Reactive) Strategy → HR HR responds to strategy after it is set
3. Two-way (Proactive) Strategy ↔︎ HR HR informs and is informed by strategy
4. Integrative Strategy ≡ HR HR is a co-author of strategy; CHRO in C-suite

27.7 Strategic HR Planning Process

TipStrategic HR planning — six steps
  1. Environmental scanning — PESTEL, labour market, demographic, technology.
  2. Strategic analysis — match HR with business goals.
  3. HR demand and supply forecasting — Topic 24 techniques.
  4. HR strategy formulation — recruitment, T&D, comp, performance, ER strategies.
  5. HR strategy implementation — through HR systems, line managers.
  6. HR strategy evaluation — HR Scorecard, HR analytics.

27.8 High Performance Work System (HPWS)

A High Performance Work System (HPWS) is a bundle of HR practices that, combined, produce superior performance. Mark Huselid’s (1995) landmark Academy of Management Journal study showed firms with HPWS had 24 % higher market value and lower turnover.

TipCommon HPWS components
  • Selective hiring — with valid tests.
  • Extensive training and development.
  • Performance-linked pay — variable compensation.
  • Self-managed teams.
  • Employment security.
  • Information sharing — open-book management.
  • Reduced status differences.
  • Employee voice and participation.

27.9 HR as a Strategic Partner — Ulrich’s Influence

Dave Ulrich’s Human Resource Champions (1997) re-framed HR’s role. Topic 23 covers the original 4 roles in detail. Modern HR is expected to be:

TipThe CHRO’s strategic agenda
  • Linking HR strategy to business strategy.
  • Building workforce of the future — skill gaps, succession.
  • Designing organisations — structure, culture.
  • Leading change — M&A integration, digital transformation.
  • Owning analytics — workforce data → insight.
  • Coaching CEO and top team — leadership development.
  • Managing reputation — employer brand, ESG.

27.10 Resource-Based View and HR

Jay Barney’s Resource-Based View (1991) argues that competitive advantage stems from VRIN resources — Valuable, Rare, Inimitable, Non-substitutable. People meet all four criteria, especially when combined with culture and processes. Wright, Dunford, Snell (2001) extended this to Strategic Human Capital as the key intangible.

VRIO (Barney’s later refinement) adds Organisation — does the firm have systems to exploit the resource?

27.11 Strategic HR Metrics — HR Scorecard

Brian Becker, Mark Huselid and Dave Ulrich’s HR Scorecard (2001) adapts Kaplan-Norton’s Balanced Scorecard to HR. Four perspectives:

TipHR Scorecard — four perspectives
Perspective HR question Sample metric
Financial Does HR deliver value? ROI on training, cost per hire
Customer Do HR practices benefit internal customers? Employee NPS, hire-quality
Internal Process Are HR processes efficient? Time-to-fill, training completion
Learning & Growth Are HR people learning? HR-team competency, certification

27.13 Practice Questions

Q 01 Wright-McMahan Easy

The foundational definition of SHRM as "the pattern of planned human-resource deployments to enable the firm to achieve its goals" is by:

  • ABeer et al.
  • BWright & McMahan (1992)
  • CUlrich
  • DFombrun et al.
View solution
Correct Option: B
Patrick Wright & Gary McMahan's 1992 *Journal of Management* paper.
Q 02 SHRM features Medium

Compared to traditional HRM, SHRM is characterised primarily by:

  • AShort-term, reactive, departmental
  • BLong-term, proactive, integrated with business strategy
  • CFocused only on payroll and welfare
  • DCompliance-driven
View solution
Correct Option: B
SHRM is long-term, proactive, integrated with business strategy.
Q 03 Best-practice Medium

The "best-practice" / universalistic approach to SHRM is most associated with:

  • AJeffrey Pfeffer
  • BSchuler & Jackson
  • CDelery & Doty
  • DMiles & Snow
View solution
Correct Option: A
Jeffrey Pfeffer (1998) — best-practice with 7 HR practices.
Q 04 Best-fit Medium

"Best-fit" / contingency SHRM approach (HR practices must fit business strategy) is associated with:

  • APfeffer
  • BSchuler & Jackson (1987)
  • CBeer et al.
  • DFombrun et al.
View solution
Correct Option: B
Schuler & Jackson (1987). Configurational — Delery & Doty (1996).
Q 05 Miles-Snow Medium

Miles and Snow's strategic typology classifies firms into:

  • ADefenders, Prospectors, Analysers, Reactors
  • BStars, Cows, Dogs, Question Marks
  • CCost · Differentiation · Focus · Hybrid
  • DHard · Soft · Mixed · None
View solution
Correct Option: A
Miles & Snow (1978): Defenders · Prospectors · Analysers · Reactors.
Q 06 HPWS Hard

Mark Huselid's landmark 1995 study showed that High Performance Work Systems are associated with:

  • ALower employee turnover and higher market value
  • BHigher turnover
  • CNo effect on performance
  • DLower employee engagement
View solution
Correct Option: A
Huselid (1995, AMJ): HPWS firms had lower turnover, higher productivity, ~24 % higher market value per employee.
Q 07 Linkage Medium

Golden and Ramanujam (1985) identified four levels of HR-strategy linkage. The highest level is:

  • AAdministrative
  • BOne-way
  • CTwo-way
  • DIntegrative
View solution
Correct Option: D
The integrative level — HR is a co-author of strategy; CHRO is in the C-suite.
Q 08 RBV Medium

Under Barney's Resource-Based View (1991), HR is a source of sustained competitive advantage when it is:

  • AVRIN
  • BSMART
  • CPESTEL
  • DSWOT
View solution
Correct Option: A
VRIN: Valuable · Rare · Inimitable · Non-substitutable. VRIO adds Organisation.
Q 09 HR Scorecard Medium

The "HR Scorecard" — adapting the Balanced Scorecard to HR — is by:

  • AKaplan & Norton
  • BBecker, Huselid & Ulrich (2001)
  • CPfeffer & Sutton
  • DWright & McMahan
View solution
Correct Option: B
Brian Becker, Mark Huselid and Dave Ulrich, *The HR Scorecard* (2001). Builds on Kaplan & Norton's Balanced Scorecard.
Q 10 War for talent Hard

The phrase "War for Talent" was coined in 1998 in a study by:

  • AMcKinsey (Chambers et al.)
  • BBCG
  • CMercer
  • DDeloitte
View solution
Correct Option: A
McKinsey's Ed Michaels, Helen Handfield-Jones, Beth Axelrod and Steven Hankin (Chambers et al.) coined "War for Talent" in a 1998 *McKinsey Quarterly* paper. Book followed in 2001.
Q 11 Configurational Hard

The configurational approach to SHRM (1996) is associated with:

  • APfeffer
  • BSchuler & Jackson
  • CDelery & Doty
  • DBeer et al.
View solution
Correct Option: C
Delery & Doty (1996) — bundles of mutually reinforcing practices fit each strategy.
Q 12 Strategy fit Medium

According to Schuler-Jackson, a *cost-leadership* strategy requires which HR profile?

  • ABroad skills, long-term investment, loose JDs
  • BTight JDs, short-term, narrow training, low investment
  • CHigh creativity, autonomy and risk-taking
  • DHeavy unionisation
View solution
Correct Option: B
Cost leadership → predictable behaviour → tight JDs, short-term focus, narrow training, low investment.
Q 13 Ulrich Easy

Dave Ulrich's *Human Resource Champions* (1997) identifies how many HR roles?

  • A3
  • B4
  • C5
  • D7
View solution
Correct Option: B
Four roles: Strategic Partner · Change Agent · Administrative Expert · Employee Champion.
Q 14 Matching Medium

The Michigan / Matching model HR cycle has four phases. They are:

  • ASelection · Appraisal · Rewards · Development
  • BPlan · Do · Check · Act
  • CStrategic · Tactical · Operational · Functional
  • DHire · Fire · Promote · Retire
View solution
Correct Option: A
Fombrun-Tichy-Devanna (1984): Selection · Appraisal · Rewards · Development with Performance at the centre.
Q 15 Boundaryless Hard

The concept of "boundaryless career" was coined by:

  • AArthur & Rousseau
  • BEdgar Schein
  • CDonald Super
  • DTim Hall
View solution
Correct Option: A
Michael Arthur and Denise Rousseau (1996) — careers that move across organisations and roles, beyond a single firm.
Q 16 Strategic Partner Medium

In Ulrich's four-role model, "Strategic Partner" focuses on:

  • AAligning HR strategies with business strategy
  • BRe-engineering HR processes
  • CListening to employees
  • DDriving transformation
View solution
Correct Option: A
Strategic Partner — aligning HR strategies with business strategy. The other three: Change Agent (transformation), Admin Expert (re-engineering), Employee Champion (listening).
Q 17 Harvard Medium

The Harvard model of HRM's "4 Cs" of HR outcomes are:

  • ACommitment · Competence · Congruence · Cost-effectiveness
  • BCustomer · Cost · Cash · Cycle-time
  • CConscience · Capability · Compensation · Career
  • DCode · Compliance · Conduct · Culture
View solution
Correct Option: A
Harvard (Beer et al. 1984): Commitment · Competence · Congruence · Cost-effectiveness.
Q 18 HR Scorecard Medium

The HR Scorecard adapts which of these to HR?

  • APorter's Five Forces
  • BBalanced Scorecard
  • CSWOT Analysis
  • DPESTEL
View solution
Correct Option: B
Becker-Huselid-Ulrich's HR Scorecard adapts Kaplan & Norton's Balanced Scorecard (1992) to HR.
Q 19 Talent Medium

The "knowledge economy" driver of SHRM points to:

  • ACapital being the chief source of competitive advantage
  • BPeople being the chief source of competitive advantage
  • CLand being the chief source of competitive advantage
  • DTechnology fully replacing humans
View solution
Correct Option: B
In the knowledge economy, people — their knowledge, skills, judgement — are the chief source of competitive advantage.
Q 20 Match SHRM Hard

Match the SHRM concept with its author:

(i) HPWS (a) Schuler & Jackson
(ii) 4 strategic archetypes (b) Huselid
(iii) Best-fit / Strategy-driven HR (c) Pfeffer
(iv) 7 Best-practice (d) Miles & Snow
  • A(i)-(b), (ii)-(d), (iii)-(a), (iv)-(c)
  • B(i)-(a), (ii)-(b), (iii)-(c), (iv)-(d)
  • C(i)-(c), (ii)-(d), (iii)-(b), (iv)-(a)
  • D(i)-(d), (ii)-(c), (iii)-(b), (iv)-(a)
View solution
Correct Option: A
HPWS — Huselid; 4 archetypes — Miles & Snow; Best-fit — Schuler & Jackson; 7 best-practice — Pfeffer.

27.13.1 Advanced Format Questions

AR 1Assertion-ReasonHard

A: Ulrich's HR Champions model (1997) integrated HR with business.
R: HR Business Partner role emerged from this framework.

  • ABoth true; R explains A
  • BBoth true; R does not explain A
  • CA true, R false
  • DA false, R true
View solution
Correct Option: A
AR 2Assertion-ReasonMedium

A: Best-fit approach matches HR to strategy.
R: Best-practice approach assumes universal high-performance practices.

  • ABoth true; R explains A
  • BBoth true; R does not explain A
  • CA true, R false
  • DA false, R true
View solution
Correct Option: B
S 1Statement-basedMedium

SHRM frameworks: (i) Harvard model (Beer). (ii) Michigan model (Fombrun). (iii) Guest model. (iv) Warwick model.

  • AAll four
  • B(i) and (ii) only
  • C(iii) and (iv) only
  • D(i), (ii), (iii) only
View solution
Correct Option: A
S 2Statement-basedHard

Ulrich's 4 roles: (i) Strategic Partner. (ii) Change Agent. (iii) Admin Expert. (iv) Employee Champion.

  • AAll four
  • B(i) and (ii) only
  • C(iii) and (iv) only
  • D(i), (ii), (iii) only
View solution
Correct Option: A

27.14 Quick Recall

ImportantQuick recall
  • SHRM — Wright & McMahan 1992; HRM coupled with business strategy.
  • SHRM vs Traditional HRM — proactive vs reactive; long-term vs short-term; integrated vs siloed.
  • Three approaches: Best-Practice (Pfeffer 1998 — 7 practices); Best-Fit (Schuler-Jackson 1987); Configurational (Delery-Doty 1996).
  • Miles-Snow (1978): Defenders · Prospectors · Analysers · Reactors.
  • Schuler-Jackson HR fit for Porter’s three strategies.
  • 6 SHRM models: Michigan (Fombrun-Tichy-Devanna 1984) · Harvard 4 Cs (Beer 1984) · Guest (1989) · Warwick (Hendry-Pettigrew 1990) · 5-P (Schuler 1992) · Ulrich 4 roles (1997).
  • Golden-Ramanujam (1985) linkage levels: Administrative · One-way · Two-way · Integrative.
  • HPWS — Huselid (1995) — bundles produce 24 % higher market value.
  • RBV — VRIN (Barney 1991); VRIO adds Organisation.
  • HR Scorecard — Becker, Huselid & Ulrich (2001) — 4 perspectives.
  • War for Talent — McKinsey (Chambers et al.) 1998.
  • Boundaryless career — Arthur & Rousseau (1996).
  • Modern SHRM trends — People Analytics · AI · Hybrid · EX · Skill-based · DEI · Sustainability.