Stages, Content, and Theory of Strategic Human Resource Management (SHRM): An Exploratory Study

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1 Journal of Modern Accounting and Auditing, ISSN February 2014, Vol. 10, No. 2, D DAVID PUBLISHING Stages, Content, and Theory of Strategic Human Resource Management (SHRM): An Exploratory Study Gurhan Uysal Ondokuz Mayıs University, Samsun, Turkey This study discusses theory of strategic human resource management (SHRM). Theory of SHRM is that human resource management (HRM) has an impact on firm through employee. Therefore, the research topic of this study is to discuss SHRM theory. Research method is literature scanning. Research findings are, firstly, that strategic HRM can be defined with employee/firm relationship. Secondly, this study depicts its own SHRM model. In this model, HRM practices develop individual of employees in organizations, and individual increases of business departments, such as supply department, finance department, marketing department, logistics department, etc., and of business departments has an impact on firm. Furthermore, this study makes its SHRM definition. So far, there have been two definitions of SHRM in literature studies. The first definition identifies SHRM with corporate strategies and competitive advantage. The second definition describes SHRM with HRM-firm relationship. This study makes the third definition, namely, SHRM is employee/firm relationship, and this definition is figured in an SHRM model in this study. Keywords: theory of strategic human resource management (SHRM), human resource management (HRM), employee, firm Introduction: Definition of Strategic Human Resource Management (SHRM) This study aims to argue current stages, content, and theory of SHRM. Theory of SHRM is made by human resource management (HRM), employee, and firm. Therefore, SHRM can be defined with employee/business relationship, i.e., SHRM affects firm through employee. Moderator between SHRM and firm is employee. SHRM aims to increase both employee and business. If HRM aims to have an impact on firm, this is SHRM. There are nine SHRM practices to increase employee and firm simultaneously: interrelated HRM practices, individual HRM practices, management (PM), human capital, job descriptions, human resource (HR) governance, strategic partner, HR systems, and organizational learning. The most SHRM practice might be interrelated HRM practice, because it establishes an HR system in organization and provides external fit between HRM and firm, and it also has an impact on individual employee. This paper is submitted for presentation at the 11th Workshop on International Management held by European Institute for Advanced Studies in Management (EIASM) in Berlin, Germany, on October 18-19, Gurhan Uysal, associate professor, School of Business, Ondokuz Mayıs University.

2 STAGES, CONTENT, AND THEORY OF SHRM 253 Firms are to practice those nine practices in a different department than HRM department. Name of this new department may be SHRM department. Firms currently have HRM department. Personnel management operates in HRM department. PM has a supervisory position in HRM department. Therefore, SHRM department has SHRM managers. SHRM managers and SHRM departments are responsible for applying SHRM practices to increase individual and firm. Mission of this new department might be to increase firm via individual. Theory of SHRM The first article of SHRM is published in 1981 in Organizational Dynamics Journal by Devanna, Fombrun, and Tichy (1981). They identify SHRM with business strategies. They said that to become strategic, HRM must be involved with the firm s objectives. They believed that this involvement increases firm. This is the first definition of SHRM in HRM literature. Devanna et al. (1981) also published other SHRM articles between 1981 and There was also a doctoral dissertation in SHRM in 1984 at the Boston University by researcher Ilan Meshoulam. Other American scholars also studied SHRM in the 1980s, such as R. Schuler, Patrick Wright, and S. Jackson. The second definition of SHRM is made by P. M. Wright and G. C. McMahan in 1992 in Journal of Management. Wright and McMahan (1992) defined SHRM as HRM-firm link. This definition has been a widely-accepted definition of SHRM in the literature so far. This study makes the third definition of SHRM. It defines SHRM as employee/business relationship. This explains that individual employee has an impact on firm. There is a debate in studies concerning how HRM has an impact on firm. What moderators set the link between HRM and firm? Scholars argue organizational climate, innovations, corporate strategies, etc. to set the relation of HRM and firm. The third definition of SHRM may reply to this question. It establishes individual as the moderator between HRM and firm. In this SHRM theory, HRM practices increase employee. Those practices are: HR planning, staffing, training, career plans, appraisals, compensation, and others. Individuals process business processes in firm management. Business processes are supply, stock, logistics, marketing, production, accounting, finance, and others. Employees process operations in these business departments. These processes establish business departments in organizations, such as marketing department, accounting department, and logistics department. In SHRM theory, it is assumed that individual increases of those business departments, and it is expected that of business departments increases firm. Therefore, individual has an impact on firm via business processes and business departments. Therefore, the model of this SHRM theory is shown in Figure 1. Employee HRM Firm Business departments Figure 1. SHRM model of moderators between HRM-firm relationship.

3 254 STAGES, CONTENT, AND THEORY OF SHRM This model expresses Wright and McMahan s (1992) well-known description of SHRM, and it explains how HRM can have an influence on firm. This model presumes moderators between HRM-firm link. Moderators are employee and business departments. HRM aims to increase individual. It increases of business departments, and it has an impact on total firm. Prof. Mark Huselid (1995) described SHRM with high work system (HPWS). Prof. Huselid (1995) proclaimed that HR systems build HPWS in organizations. In this model, it is assumed that HPWS increases individual and then firm. Interrelationship among HRM practices builds HR systems in organizations, and it increases firm such as PM. PM expresses interrelationship among HRM practices. PM contains appraisals, career plans, training, and compensation. For example, HRM does evaluations about of employees. Some have weak, and some have high. Weak- employees participate in training programs to enhance their individual. HRM does career plans for high performers, and HRM develops compensation plan for high in order to avoid job leave. High performers also participate in training programs to enhance their individual, such as executive master of business administration (MBA) programs or MBA programs. This PM policy represents interrelationship among evaluation, training, career plans, and compensation. American scholars of SHRM also discuss fit notion in SHRM, because HPWS and HR systems require fit perspective in HRM systems and between HRM and firm. There are internal fit and external fit perspectives. Internal fit is the fit among HRM practices in interrelationship of HRM practices. External fit is the fit between HRM and firm. Internal fit is the coherence among HRM practices. For example, weak performers join training programs, or high performers possess career plans in HRM department. In addition, becoming a strategic partner leads to external fit between HRM and firm. Discussion This study presents nine SHRM practices and an SHRM model. In addition, there is another debate in literature studies about how SHRM can be put into practice. SHRM can be put into practice by SHRM managers, SHRM practices, and SHRM departments. HR governance, human capital, PM, strategic partner, interrelationship of HRM practices, individual HRM practices, job descriptions, HR systems, and organizational learning are theories of SHRM developed in earlier decades. However, those practices have different contents than traditional HRM practices. Traditional HRM practices are HR planning, staffing, training, evaluations, career plans, reward, compensation, and others. Therefore, these new practices should be practiced in different departments. This department might be SHRM department. In addition, who can be SHRM managers? Business graduates can be SHRM managers, because SHRM managers should have business management knowledge and because SHRM managers aim to increase business or firm. Therefore, they must have knowledge about business processes in organizations. Conclusion To conclude, this paper has three contributions to SHRM literature. Firstly, it identifies moderators in

4 STAGES, CONTENT, AND THEORY OF SHRM 255 HRM-firm link. Secondly, it describes interrelationship of HRM practices. It is important, because interrelationship of HRM practices designs HR system in HRM department. Thirdly, this study depicts its SHRM model (see Figure 2). HRM Individual Business departments Firm Figure 2. SHRM model. In conclusion, this study proposes theory of SHRM. Theory of SHRM is: HRM has an impact on firm through employee. Therefore, research agenda of study is to discuss SHRM theory. Research methodology is based on literature scanning. There are two major research findings in the study. Firstly, strategic HRM can be defined with employee/firm relationship. Secondly, this study depicts its own SHRM model. In this model, HRM practices develop individual of employees in organizations and individual increases of business departments, such as supply department, finance department, marketing department, logistics department, etc.. Furthermore, this study makes its SHRM definition. There have been two definitions in literature studies so far for SHRM. The first definition identifies SHRM with corporate strategies and competitive advantage. The second definition describes SHRM as HRM-firm relationship. This study makes the third definition. It is: SHRM is employee/firm relationship, and this definition is figured in an SHRM model in this study. Therefore, keywords of this paper are theory of SHRM, HRM, employee, and firm. References Devanna, M., Fombrun, C., & Tichy, N. (1981). Human resources management: A strategic perspective. Organizational Dynamics, 9(3), Huselid, M. A. (1995). The impact of human resource management practices on turnover, productivity, and corporate financial. Academy of Management Journal, 38(3), Uysal, G. (2006). Decreased effectiveness of human resources: Can HR practices influence firm (pp )? Paper presented at the 2nd International Conference on Business, Management, and Economics, Yaşar University, İzmir, Turkey. Uysal, G. (2008). Relationship among HR and firm : A Turkey context. Journal of American Academy of Business, Cambridge, 13(2), Uysal, G. (2009). Human resource management in the US, Europe, and Asia: Differences and characteristics. Journal of American Academy of Business, Cambridge, 14(2), Uysal, G. (2011). Do HR issues have an impact on HR effectiveness and organizational outcomes? Journal of Business and Economics, 2(6), Uysal, G. (2011). Human resource focus in TQM awards. Paper presented at the 26th Workshop on Strategic Human Resource Management, EIASM European Institute for Advanced Studies in Management, Reykjavik, Iceland, May 16-17, Uysal, G. (2012). For the development of effective HRM systems: Inter-relationships between HRM practices using correlation analysis. World Review of Entrepreneurship, Management, and Sustainable Development, 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. (2012). The effect of COSO implications on human resource management. Journal of Business and Economics, 3(1), Uysal, G. (2013). Dimensions of American SHRM: Human capital, HR systems, and firm. Paper presented at the ICBMEF rd International Conference on Business, Management, Economics, and Finance, Izmir, Turkey, October 4-5, 2013.

5 256 STAGES, CONTENT, AND THEORY OF SHRM Uysal, G. (2013). Progress of HRM to strategic HRM: Human resources as capital. Paper presented at the 28th Workshop on Strategic Human Resource Management, EIASM European Institute for Advanced Studies in Management, April 15-16, Copenhagen, Denmark. Uysal, G. (2013). SHRM: Trigonometric function of employee/business relationship? Paper presented at the IIE 2013 Institute of Industrial Engineering Conference, Istanbul, Turkey, June 26-28, Uysal, G. (2013). Strategic HRM: Stages, content, and theory. Submission to the 11th Workshop on International Management, Berlin, Germany, October 18-19, Wright, P. M., & McMahan, G. C. (1992). Theoretical perspectives for strategic human resource management. Journal of Management, 18(2),

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