The purpose of this paper is to review academic literature of the different frameworks/models proposed by different researchers and eventually propose a framework of choice which will help leaders to better manage their Human Capital (HC) and understand how to incorporate HR policies into everyday decision making and long term planning. First we start by defining Strategic Human Resource Management (SHRM). We then look into what purpose it serves in an organisation. Then we look into the different models of SHRM how these models compare with each other. Literature review intends to develop a new framework which is a combination of two frameworks, The Harvard Model and the Warwick model of SHRM.
STRATEGIC HUMAN RESOURCE MANAGEMENT (SHRM)
People are the most important asset and have a considerable influence on the overall performance of the organisation Huselid (1995). Also according to Hall (2004), research has shown a clear link between the performance of employees and the policies of an organisation. Hence, effective human capital management practices are necessary if an organisation wants to gain competitive advantage. In a search for competitive advantage, SHRM has attracted a lot of attention over the years. After the criticism of being too traditional and not adding value to the organisation, came the need of need for HR to justify it existence by connecting with overall organisational strategy and hence the emergence of SHRM (Sinha, 2010). So the question arises as to what exactly is SHRM? Wright & Snell (1989), define SHRM as those activities which support and organisations competitive strategy. According to Appleby & Mavin (2000), it is an approach to managing people which seeks to achieve competitive advantage through the strategic development of a highly committed and capable workforce. Miller (1989), “Strategic Human Resource Management encompasses those decisions and actions, which concern the management of employees at all levels in the business and which are directed towards creating and sustaining competitive advantage”. These definitions make it clear that SHRM is more than the traditional role played by HR of attracting and retaining people, rather it is about a business achieving its long term goals through the effective development and management of its people.
Over the years various models for SHRM have been proposed by researchers. According to Legge (1995), HR policies should be integrated with strategic business planning. She gives different examples of normative models of HRM and suggests that there are hard and soft models which distinguish if emphasis is being placed on human or the resource. However she does not define her classification clearly (Cakar, Bititci & MacBryde, 2003). Guest (1987), proposed that the integration of HRM practices such as selection, training, appraisal, rewards, job design, involvement and security can help achieve desirable results. This is also support by authors such as Tichy and Devanna (1984) and Pettigrew & Hendry (1990).
Wright & McMahan (1992) have created a model which took into consideration the resource based and behavioural view of the organization. They also outlined HR competencies resulting from the thought of strategy. Ulrich and Lake (1991), state that capabilities can be developed in an organisation by adopting principles and attitudes, which will decide and guide the behaviour of the management. They suggest that to improve effectiveness, Hr must align strategies, processes and practices with business needs. The Harvard model by Beer et al (1984) consists of six components: situational factor, stakeholder interests, HRM policy choices, HR outcomes, long term consequences and a feedback loop (Bratton & Gold 2001). It talks about how situational factors and stakeholder interests impact on HR policy and choices and how this in turn has long term consequences that feedback on situational factors and...