Gurhan Uysal. Ondokuz Mayıs University, Samsun, Turkey

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1 Journal of US-China Public Administration, ISSN July 2013, Vol. 10, No. 7, D DAVID PUBLISHING Dimensions of American SHRM: Human Capital, HR Systems and Firm Performance Gurhan Uysal Ondokuz Mayıs University, Samsun, Turkey American scholars identify strategic human resource management (SHRM) with human resources (HR) system and firm. Major definition of SHRM is human resource management (HRM)-firm relation. HR system is important to set HRM- link, because HR system includes interrelated HRM practices. Most prominent set of SHRM is interrelated HRM practices, because it establishes the link between individual and firm. There is a debate in SHRM theory what factors set relationship between HRM and. This study argues that individual is a moderator between HR and. Interrelated HRM practices are important to enhance individual. Therefore, interrelated HRM practices are crucial to SHRM. Finally, American scholars view that HR system is important in SHRM, because it establishes high work system (HPWS), and HPWS is expected to increase individual and then firm. Therefore, American model of SHRM might be HPWS, individual, and firm. HR systems establish HPWS. Therefore, scholars tend to system approach in SHRM, because it includes interrelated HRM practices in SHRM. Keywords: strategic human resource management (SHRM), human resources (HR) system, high work system (HPWS), firm, American model This study argues dimensions of strategic human resource management (SHRM) in American theory. American scholars identify SHRM with human resources (HR) system and firm. They say that HR system increases individual, and it increases firm. In addition, HR system includes interrelated HRM practices, and it establishes high work system (HPWS) in organizations. Therefore, American model in SHRM contains HPWS, individual, and firm. First, scholars studied SHRM in 1981 in USA. The first paper of SHRM was published in Organizational Dynamics Journal in 1981 by American scholars, and the first doctoral thesis was written at Boston University in Then, scholars worldwide started to discuss SHRM notion in the 1990s. The first definition of SHRM identifies SHRM with competitive advantage. Scholars view that HRM should be linked with corporate strategies. This increases competitive advantage of firm. The second definition was made in 1992 by American scholars in Journal of Management. The second definition is that SHRM is human resource management (HRM)-firm relationship. This is major and accepted definition of SHRM in theory. Corresponding author: Gurhan Uysal, Ph.D., associate professor, School of Business, Ondokuz Mayıs University; research field: human resource management.

2 DIMENSIONS OF AMERICAN SHRM 721 In addition, there is a discussion in SHRM theory how SHRM can be put into practice by firms. This study argues that SHRM can be put into practice by establishing SHRM department, SHRM managers, and SHRM practices. It is important to understand interrelated HRM practices in SHRM theory. HRM practices are individual and separate in HRM, while HRM practices are interrelated in SHRM. This might be a major difference between HRM and SHRM. Because interrelated HRM practices build HR systems and HPWS in organizations; and it increases the impact of HRM on individual. Therefore, SHRM department and SHRM managers should implement interrelated HRM practices in SHRM departments in order to increase firm and individual. This study aims to argue dimensions in American SHRM, and it discusses model of American SHRM. American scholars, such as Prof. Mark Huselid, discuss the importance of HR system in SHRM. Therefore, this study claims that dimensions of American SHRM are HR system and firm. Other scholars also discuss importance of fit in SHRM such as Delery and Doty. Internal fit is the key to set interrelationship between HRM practices in HR system; and external fit is the key to link HR system to firm. Therefore, the third dimension can be fit notion in American SHRM. Review of SHRM Theory SHRM is defined with HR systems, human capital and firm in earlier theory. This is American definition of SHRM. They define SHRM with human capital, HR system, firm, fit, and HPWS. In addition, human resource work system (HPWS) is used to define SHRM in literature. HPWS is fit between HRM practices to increase employee. There are internal fit and external fit approaches. Internal fit is alignment of HR practices in HPWS system. Alignment of HR practices is to set up interrelationship between HRM practices. External fit is contribution of HRM to firm s objectives. Aligned with HR architecture notion, human capital devises HR systems in organizations. HR architecture is establishing HR system and HPWS in organizations. And therefore, HR architecture is related with interrelated HRM practices. Fit approach is important in SHRM. Because SHRM is defined with HR system, or interrelationships between HRM practices. Therefore, fit is important to internally align HRM practices, and externally align HRM with business objectives. HPWS is a system approach to SHRM (see Figure 1). Interrelationship among HRM practices, fit, and HR system make up HPWS in this model. Interrelated HRM practices Fit HR system HPWS Figure 1. HPWS model. Major definition of SHRM in literature studies is HRM-firm link. But there is an argument about what factors increase the impact of HRM on firm. This study explains that positive organizational attitude and behaviours, and individual provide the link between HRM and firm. Accordingly, HRM practices lead to positive organizational attitude and behaviours. And

3 722 DIMENSIONS OF AMERICAN SHRM organizational attitude and behaviours develop individual. Past two decades witness action box in SHRM. These actions are such as HR governance, HPWS, HR system, management, strategic partner, and human capital. HRM is proper for applying traditional HRM practices. Those human resource methods are applied in different department. This can be SHRM department. There is Harvard approach to define SHRM. SHRM is defined as the link between HRM and business strategies in Harvard approach, i.e., Harvard approach matches corporate strategy with HRM policies. Harvard approach defines HRM with high commitment work system (HCWS). Organizational attitude and behaviours are more important in Harvard system in HCWS. In addition, is more important in HPWS system. SHRM is defined with that HR strategy is integrated with corporate strategy. Strategic plan of firms can establish the link between HRM and corporate strategy. Therefore, HRM becomes strategic partner of firms in developing strategic plan. HR strategy is linked with corporate goals in strategic plan. Major goal is firm, and strategic plan may establish this link between HRM and corporate goals. HR can become strategic partner in strategic plan. Four perceptions of HRM help HR practitioners to define SHRM. They are universalistic, contextual, contingency and configurational perspectives. Americans tend to universalistic and configurational perspectives. Configurational perspective requires HR system approach. Asian HRM tends to contingency perspective. There is a moderator in HRM-firm relationship in contingency perspective. Contextual perspective exists in Europe, because stakeholders, institutions and their legislations are important in European business. Firms consider environment in contextual perspective. In universal description, there is a linear relation between HRM practices and firm. There is a fifth perspective in HRM. It is complementary perspective. European scholars recommend complementary perspective. This new perspective proposes a shift in consideration of environmental factors. Asian SHRM is toward American SHRM model. For example, Chinese adopt HPWS approach. American model of SHRM is described in Figure 2. HPWS Individual Firm Figure 2. American model of strategic HRM. In addition, this study establishes its SHRM model (see Figure 3). HRM practices Organizational attitude and behaviours Individual Firm Figure 3. SHRM model. There is a debate in SHRM literature about what factors increase the impact of HRM on firm. This study presents two factors: positive organizational attitude and behaviours, and individual. It is expected that application of HRM practices in organizations leads to positive organizational attitude and

4 DIMENSIONS OF AMERICAN SHRM 723 behaviours, and positive organizational attitude and behaviours increase individual. Because motivation, satisfaction, commitment, justice, and trust are expected to increase individual. Therefore, this study presumes that two factors (positive organizational attitude and behaviours, and individual ) set up the relationship between HRM and firm. For example, organizational justice, employee morale, turnover rate, and employee commitment are positive organizational attitude and behaviours. HRM-Firm Performance Link: Moderators HRM can be defined with, individual. HRM aims to increase individual of employees. HRM has a number of practices to increase individual. They are: HR planning, staffing, training, compensation, reward, career planning, industrial relations, health and security, and personnel management. Secondly, HRM does recruitment for business processes. There are several business processes in firms to convert inputs to outputs. Supply, stock, logistics, production, marketing, accounting, finance and others are the processes that enable firms to convert inputs to outputs. HRM does recruitment for these business processes for their human resource needs. For example, HRM hires engineers for production; marketing manager for marketing; logistics experts for logistics; and specialists for supply departments. Engineers, foremen, managers, sales representatives, experts, and specialists are HR of firms. Thirdly, HRM considers employees as resources. Therefore, HRM aims to increase efficiency of resources. Major focal of efficiency is. Therefore, HRM aims to increase of employees. Resources view is that HR can be considered as production factors of firm. There are four production factors in business operations: raw materials, HR, capital, and knowledge. Firms aim to increase efficiency of four. But HRM aims to increase efficiency of one: HR. HRM aims to increase employee, and HRM aims to increase firm. This defines SHRM. Major definition of SHRM is HRM-firm link. How does HRM impact on firm? HRM influences on firm through employee. Because employees processes business processes in firms such as supply, stock, logistics, finance, accounting, marketing, and production. It is expected that of employees increases of business processes, and of business departments increases firm. This relationship determines another model in SHRM. Employee HRM Firm Business processes Figure 4. Moderators of HRM-firm link. Figure 4 presents moderators between HRM and firm as employee and business processes. SHRM can be defined as employee and firm relationship, i.e., SHRM aims to increase firm through employee. HRM only aims to increase employee. Therefore, HRM is oriented to employee. But SHRM aims to increase both employee and firm. Therefore,

5 724 DIMENSIONS OF AMERICAN SHRM SHRM is oriented to business. SHRM is HRM-firm relationship, and SHRM has several practices to set up this relationship. SHRM practices are/might be: (1) Interrelated HRM practices; (2) HR system; (3) Individual HRM practices; (4) HR governance; (5) Performance management; (6) Human capital; (7) Job descriptions; (8) Strategic partner. It is assumed that those practices increase employee and firm together. The most prominent practice among them is interrelated HRM practices, because it influences employees individual. Discussion Eight SHRM practices can be considered by firms to increase both individual and firm. They are: HR systems, human capital, individual HRM practices, interrelated HRM practices, job descriptions, management, strategic partner, and HR governance. Those SHRM practices are to be implemented in SHRM departments by SHRM managers. Those SHRM practices are developed by HR practitioners in past decade. They are different from traditional HRM practices. Therefore, those practices are represented with another department in organizations. This is SHRM department. Those practices can be practiced in SHRM department. SHRM managers keep these eight practices in their mind to apply them in organizations. For example, HRM can become strategic partner of firm by participating decision-making process about employment decisions such as promotion decision, staffing process, reward distribution, and career planning. SHRM managers keep this notion in mind to become strategic partner to firm management. Further, management is another SHRM practice to increase individual. It contains HRM practices as evaluations, compensation, career planning and training. Performance management represents the interrelationship between HRM practices. SHRM managers keep this relationship in mind, for example, to do career planning for high performers, or to participate poor-performers to training. So, SHRM managers make decisions of career and training aligned with evaluations. It is believed that this package of HRM practices increase individual of employees. Furthermore, HR governance is to manage exchange relationship between firm and HR, i.e., HRM department sets up the relationship between firm and employees. SHRM managers keep in mind this HR governance notion. HRM practices enable HRM to set up the relationship between firm and employee such as job descriptions, training, career planning, and HR planning. For example, HRM implies employees about their job duties, tasks and responsibilities in job descriptions. This is a relationship between firm and employee. Firms tell employees what to do at job. In career planning, firm determines future career ladders of employees. Therefore, HR governance is firm-employee interactions. What differentiates HRM from SHRM? Reply is. HRM is interested with employee s individual, while SHRM is interested with both individual and firm.

6 DIMENSIONS OF AMERICAN SHRM 725 SHRM aims to achieve firm by individual. Therefore, HRM practices are individual in HRM; and HRM practices are interrelated in SHRM. This is the second difference between HRM and SHRM. Conclusions HRM is based on resource-based view. That requires human capital perspective. Resource-based theory makes employees as capital in organizations. Therefore, SHRM perceives employees as human capital in order to achieve organizational objectives and firm. HR system increases of human capital. SHRM has system approach, because HRM practices are interrelated in SHRM. And interrelationship leads to HR system thinking. Interrelationship of HRM practices is the key to achieving individual in SHRM. In HRM, HRM practices are individual. HRM departments implement individual HRM practices to increase employee s individual. SHRM might have stakeholder approach, and HRM must have shareholder approach. Because SHRM is interested in firm, and stakeholders of firm are interested in firm. Therefore, SHRM may aim to increase stakeholder value. In contrast, HRM is interested in shareholder value, because HRM focuses on individuals. This is the third difference in HRM and SHRM. There should be job discrimination between HRM and SHRM. HRM is responsible for increasing individual. And SHRM is responsible for firm. Therefore, HRM departments of organizations implement individual HRM practices. But SHRM departments implement interrelated HRM practices. This makes job descriptions for HRM and SHRM, and results in job differentiation between HRM and SHRM. References Alcazar, F. M., Fernandez, P. M. R., & Gardey, G. S. (2013). Workforce diversity of the literature and implications for future research. Cross Cultural Management, 20(1), Baker, D. (1999). Strategic human resource management: Performance, alignment, management. Librarian Career Development, 7(5), Buller, P. F., & McEvoy, G. M. (2012). Strategy, human resource management and : Sharpening line of sight. Human Resource Management Review, 22, Chadwick, C. (2005). The vital role of strategy in strategic human resource management education. Human Resource Management Review, 15, Chew, I. K.-H., & Chong, P. (1999). Effects of strategic human resource management on strategic vision. The International Journal of Human Resource Management, 10(6), Chenevert, D., & Tremblay, M. (2009). Fits in strategic human resource management and methodological challenge: Empirical evidence of influence of empowerment and compensation practices on human resource in Canadian firms. The International Journal of Human Resource Management, 20(4), Delery, J. (1998). Issues of fit in strategic human resource management: Implications for research. Human Resource Management Review, 8(3), Erciksen, J., & Dyer, L. (2005). Toward a strategic human resource management model of high reliability organization. The International Journal of Human Resource Management, 16(6), Green, K. W., Wu, C., Whitten, D., & Medlin, B. (2006). The impact of strategic human resource management on firm and HR professionals work attitude and work. International Journal of Human Resource Management, 17(4), Harness, T. (2009). Research methods for the empirical study of strategic human resource management. Qualitative Market Research: An International Journal, 12(3), Karami, A., Angloi, F., & Cusworth, J. (2004). Strategic human resource management and resource-based approach: The evidence

7 726 DIMENSIONS OF AMERICAN SHRM from the British manufacturing industry. Management Research News, 27(6), Kiessling, T., & Harvey, M. (2005). Strategic global human resource management research in the twenty-first century: An endorsement of the mixed-method research methodology. International Journal of Human Resource Management, 16(1), Lepak, D. P., & Snell, S. A. (1998). Virtual HR: Strategic human resource management in the 21st century. Human Resource Management Review, 8(3), Martin, G., & Beaumont, P. (2001). Transforming multinational enterprises: Towards a process model of strategic human resource management change. The International Journal of Human Resource Management, 12(8), Martin, G., & Gollan, P. (2012). Corporate governance and strategic human resource management in the UK financial services sector: The case of the RBS. The International Journal of Human Resource Management, 23(16), McMahan, G. C., Bell, M. P., & Virick, M. (1998). Strategic human resource management: Employee involvement, diversity, and international issues. Human Resource Management Review, 8(3), Miller, D. (2006). Strategic human resource management in department stores: An historical perspective. Journal of Retailing and Consumer Services, 13, Molineux, J. (2013). Enabling organizational cultural change using systemic strategic human resource management A longitudinal case study. The International Journal of Human Resource Management, 24(8), Nagaraj, R., & Kamalanabhan, T. J. (2006). A study on the impact of strategic human resource practices on organizational. Journal of Transnational Management, 10(4), Nigam, A. K., Nongmaithem, S., Sharma, S., & Tripatti, N. (2011). The impact of strategic human resource management on the of firms in India: A study of service sector firms. Journal of Indian Business Research, 3(3), Offstein, E. H., Gnyawali, D. R., & Cobb, A. T. (2005). A strategic human resource perspective of firm competitive behavior. Human Resource Management Review, 15, Rogers, E. W., & Wright, P. M. (1998). Measuring organizational in strategic human resource management: Problems, prospects, and information markets. Human Resource Management Review, 8(3), Taylor, M., & Finley, D. (2008). Strategic human resource management in US luxury resorts A case study. Journal of Human Resources in Hospitality & Tourism, 8(1), Uysal, G. (2012). Taylor, HRM, strategic HRM with jobs, employee, business relationship: HR governance through 100 years. Journal of Business and Economics, 3(4), Uysal, G. (2013). Strategic HRM: Current stages, content, and theory. Submission to 11th Workshop on International Management, EIASM European Institute for Advanced Studies in Management, October 18-19, 2013, Berlin, Germany. Van Buren III, H., Greenwood, M., & Sheehan, C. (2011). Strategic human resource management and the decline of employee focus. Human Resource Management Review, 21, Vedd, R., & Kouhy, R. (2001). Management accounting & strategic human resource management. The Journal of Applied Accounting Research, 6, Wright, P. (1998). Introduction: Strategic human resource management research in the 21st century. Human Resource Management Review, 8(3), Zhang, L., Nie, T., & Luo, Y. (2009). Matching organizational justice with employment modes: Strategic human resource management perspective. Journal of Technology Management in China, 4(2),

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