Journal of US-China Public Administration, ISSN 1548-6591
March 2013, Vol. 10, No. 3, 331-337
D DAVID PUBLISHING
Progress of HRM to SHRM: Human Resources as “Capital”
Gurhan Uysal
Ondokuz Mayıs University, Samsun, Turkey
Human resource management (HRM) has two aims for firms: performance and recruitment. HRM aims to increase
individual performance of employees. And HRM does recruitment of human resources for firms. This paper
describes strategic HRM (SHRM) as the relationship between individual performance and business performance. It
is expected that this relationship between employee and business performance progresses HRM to SHRM. In
addition, this paper describes SHRM practices. SHRM practices are human resource governance, interrelation of
HRM practices, human capital, human resource systems, performance management, individual HRM practices, and
strategic partner. Those SHRM practices are expected to increase both individual performance and business
performance.
Keywords: strategic human resource management (SHRM), employee/business performance, human resource
management (HRM)
Human resource management (HRM) is defined as employees are not cost, but employees are resource.
Resource can be identified with production factors. There are four production factors. They are: raw materials,
human resources, capital, and knowledge. Firms aim to increase the efficiency of four, but HRM aim to
increase efficiency of one: human resources.
Therefore, HRM departments apply several HRM practices to increase the efficiency of employees.
Human resource practices are human resource planning, staffing, training, performance appraisal, reward,
career planning, compensation, job health and security, industrial relations and personnel management (PM).
Therefore, first definition of HRM is “to increase efficiency of human resources through HRM practices”. The
Signal of efficiency is individual performance. So, HRM practices enable firms to increase individual
performance.
Secondly, HRM can be identified with the term “performance”. HRM aims to increase the individual
performance of employees. If employee’s individual performance increases, performance of firm increases.
This relation defines strategic HRM (SHRM) in this study. SHRM can be defined as the relationship between
employee performance and business performance.
Therefore, this paper aims to argue the transition from HRM to SHRM with SHRM practices. Secondly,
this paper argues SHRM practices for SHRM managers.
HRM Practices to Business Performance: Targets of HRM
HRM has four targets: (1) individual performance; (2) positive organizational attitudes and behaviours; (3)
Corresponding author: Gurhan Uysal, Ph.D., associate professor, School of Business, Ondokuz Mayıs University; research
field: human resource management. E-mail: [email protected]; [email protected].
332 PROGRESS OF HRM TO SHRM: HUMAN RESOURCES AS “CAPITAL”
human resource governance; and (4) employee satisfaction. HRM aims to increase individual performance via
HRM practices. HRM aims to achieve positive organizational attitudes and behaviours. HRM is to manage
relationship between firm and employees. And HRM aims to increase employee satisfaction. Human resource
governance can be defined with management relationship between firm and employees. Therefore, human
resource governance can be identified as SHRM practices.
So, HRM practices are important to achieve those targets above. They are: human resource planning,
staffing, training, performance evaluation, compensation, career planning, job analyses, job health and security,
industrial relations, and PM. HRM departments of firms apply those HRM practices to increase employee
performance. Because employee’s individual performance is expected to increase firm performance.
The second target of HRM departments is to achieve positive organizational attitudes and behaviours.
HRM departments implement HRM practices to obtain positive attitudes and behaviours. These attitudes and
behaviours are commitment, motivation, satisfaction, individual performance, organizational citizenship and
organizational support. It is expected that those attitudes and behaviours increase individual performance. For
example, commitment behaviour is important to SHRM. Because HRM does the investment on employees, and
HRM can obtain return on investment (ROI) with long-time employees, employee commitment is the key to
obtain benefits from training practices.
This study describes SHRM as employee performance/business performance relationship. Because
positive attitudes and behaviours are expected to increase employee performance, to achieve positive
organizational attitudes and behaviours is critical to strategic HRM.
The third target of HRM is to manage relationship between employees and firm. This is exchange
relationship between firm and employee. For example, training or career planning is the relation between
employee and firm. Training is firm’s investment to employees to increase their individual performance.
Because employee learns occupational knowledge in training, and career planning is succession planning made
by the firm for employee’s future, training and career planning establish the relation between firm and
employees. Therefore, human resource governance is to manage exchange relationship between firm and
employees.
The fourth target of HRM is to obtain employee satisfaction, because employee satisfaction is one of
positive organizational attitudes and behaviours. And it is important to individual performance.
To conclude, what is the future of HRM? The future of HRM is to develop positive organizational
attitudes and behaviours in organizations to achieve individual performance. Therefore, positive attitudes and
behaviours are important for SHRM in employee/business performance relationship. Literature studies
demonstrate that individual HRM practices develop positive organizational attitudes and behaviours in
organizations. In addition, interrelated HRM practices also develop employee performance. Therefore, both
individual HRM practices and interrelated HRM practices can be considered as SHRM practices by SHRM
managers.
SHRM: Employee Performance/Business Performance Relationship?
So, HRM is related with employee performance, and SHRM is related with business performance. SHRM
aims to increase business performance through individual performance.
HRM aims to increase employee performance so that employees effectively do their task duties in
business functions. If task performance of employees increases in business functions, therefore, performance of
PROGRESS OF HRM TO SHRM: HUMAN RESOURCES AS “CAPITAL” 333
firm increases. This is called as business performance in this study; and refers to the relationship between
employee performance and business performance in the study to understand SHRM. This relationship might set
up HRM-SHRM relationship as the relationship between employee performance and business performance.
Therefore, HRM is oriented to employees for individual performance; and SHRM is oriented to firm
performance. Therefore, PM focuses on “job”, HRM focuses on “employee”, and SHRM focuses on
“business”.
Therefore, in PM we say “personnel” for human resources, and, in HRM we say “employee”. For SHRM
we did not clarify the “term” yet. We maybe say “achievers”, achievers of firm’s objectives, because SHRM
aims to achieve organizational objectives such as firm performance.
Final Remarks
In HRM employees are considered as “resources”. In SHRM employees might be considered as “capital”,
human capital. HRM considers employees as a resource. But SHRM perceives employees as a capital, human
capital. SHRM acknowledges that human capital increases individual performance.
Human capital is important in SHRM because this is expectation that human capital (or intellectual capital)
increases individual performance. And individual performance of each employee increases total business
performance. Therefore, this study aims to progress HRM into SHRM by employee/business performance
relationship.
In SHRM, practices are interrelated HRM practices, human capital practices and human resource system.
Those three variables may progress HRM into SHRM. HRM practices are separate and individual in HRM.
There are individual HRM practices in HRM. However, HRM practices are interrelated in SHRM. These
interrelationships build human resource system. And human resource system, interrelationship of HRM
practices, and human capital are the practices that can be established in SHRM. For example, HRM
departments correlate training, career planning and performance appraisal in “performance management”.
Therefore, performance management is maybe another SHRM practice. Further, HRM departments lead new
employees to training and development program. So, HRM correlates training to staffing. These relations
represent interrelationships among HRM practices.
To conclude, in order to progress HRM to SHRM, firms may associate individual performance with
business performance. And interrelated HRM practices, human capital and human resource system are expected
to increase employee performance. Therefore, those practices are considered as SHRM practices. In addition,
performance management and human resource governance can become another SHRM practices to increase
individual performance and business performance consequently.
Finally, this study has three contributions for academics:
(1) Positive organizational attitudes and behaviours are important to increase individual performance.
Therefore, those positive organizational attitudes and behaviours are critical to SHRM. The major objective of
SHRM is to achieve business performance. Therefore, individual HRM practices are considered as SHRM
practices;
(2) Employee is considered as human capital in SHRM;
(3) Human capital, interrelated HRM practices, human resource system, human resource governance,
performance management, and individual HRM practices are considered as SHRM practices.
334 PROGRESS OF HRM TO SHRM: HUMAN RESOURCES AS “CAPITAL”
Discussion of PM
PM is practiced inside organizations. It should not be forgotten and ignored. Because PM holds career
records of employees such as compensation benefits or performance notes. The information (records) can save
in a personnel file or in human resource information system. Therefore, PM should be kept as one of HRM
practices by firms.
So, PM should be applied inside HRM and HRM should be applied inside SHRM. Figure 1 shows this
relation.
PM
HRM SHRM
Figure 1. Relation between PM, HRM and SHRM.
Job
Employee Business
Figure 2. Relation between HRM’s organizational variables.
Figure 2 further shows the relation between HRM’s organizational variables. Because it presumes that PM
is associated with jobs. HRM is associated with “employees”. And SHRM is associated with “business”.
Because Frederick W. Taylor is interested in jobs in firms to increase organizational effectiveness, he applied
job analysis technics and HRM practices in firms to increase organizational effectiveness. In addition, HRM
aims to increase employee efficiency. And SHRM aims to increase business performance.
HRM departments in firms implement PM together with HRM practices. And PM has supervisory position
inside HRM departments in line management. Therefore, HRM should practice PM as one of HRM practices.
There is viewpoint difference between PM and HRM. PM protects rights of firms. PM tends to firm and
firm’s objectives. In contrast, HRM is in the side of employees, and HRM tends to increase employee
efficiency. HRM aims to increase individual performance of employees to increase their efficiency at work.
Relation between PM, HRM and SHRM is presented in Figure 1. Therefore, firms should not forget and
ignore none of them, because firm needs each human resource method. Therefore, PM is hidden inside HRM.
PROGRESS OF HRM TO SHRM: HUMAN RESOURCES AS “CAPITAL” 335
And HRM is hidden inside SHRM. SHRM can be between employee and firm, because it aims to increase both
employee performance and business performance.
Figure 3 demonstrates that PM saves the interests and rights of organization. HRM tends to employees to
increase individual performance. SHRM is between firm and employee. And each is hidden inside others.
Therefore, firms should practice PM, HRM and SHRM. PM’s organizational position may be supervisory in
organizational chart inside HRM division.
PM Firm
HRM Employee
SHRM Firm and employee
Figure 3. Interests of human resource methods.
Conclusions
To conclude, this study recommends seven SHRM practices for firms to establish SHRM department and
SHRM managers in organizational structure. Those practices are:
(1) Human resource governance;
(2) Performance management;
(3) Interrelated HRM practices;
(4) Individual HRM practices;
(5) Human resource systems;
(6) Human capital;
(7) Strategic partner.
In addition, this study establishes its own SHRM model (see Figure 4).
HRM Organizational Individual Business
practices attitudes and performance performance
behaviours
Figure 4. SHRM model.
In this model, HRM departments apply HRM practices in organizations. Literature studies demonstrate
that HRM practices lead to positive organizational attitudes and behaviours in employee side. And positive
attitudes and behaviours are presumed to increase individual performance of employees. In SHRM model,
performance of employees increases performance of business.
Finally, this paper recommends firms to establish separate SHRM departments. This SHRM department is
separate from HRM departments. And SHRM department has SHRM managers. SHRM managers are to apply
SHRM practices to increase both employee and business performance, because the major objective of SHRM is
to increase firm performance.
336 PROGRESS OF HRM TO SHRM: HUMAN RESOURCES AS “CAPITAL”
References
Uysal, G. (2008). Relationship among HR and firm performance: A Turkey context. Journal of American Academy of Business,
Cambridge, 13, 77-83.
Uysal, G. (2009). Human resource management in the US, Europe and Asia: Differences and characteristics. Journal of American
Academy of Business, Cambridge, 14, 112-117.
Uysal, G. (2012a). For the development of effective HRM systems: Inter-relationships between HRM practices using correlation
analysis. World Review of Entrepreneurship, Management and Sustainable Development, 8, 1-12.
Uysal, G. (2012b). Taylor, HRM, strategic HRM with jobs, employee performance, business performance relationship: HR
governance through 100 years. Journal of Business and Economics, 3(4), 279-284.
Uysal, G. (2012c). The effect of COSO implications on human resource management. Journal of Business and Economics, 3,
46-51.
Uysal, G. (2013). Progress of HRM to strategic HRM: Human resources as capital. Submitted to the 28th Workshop on Strategic
Human Resource Management, European Institute for Advanced Studies in Management, April 15-16, Copenhagen,
Denmark.
Uysal, G., Güney, Se., Arslan, M., & Güney, Sa. (2006). İnsan kaynakları uygulamaları ve örgütsel bağlılık ilişkisi üzerine bir
araştırma (A research on relationship between organizational commitment and human resource management practice). Kara
Harp Okulu Bilim Journal, 16, 49-74.
Appendix: Program and Curriculum Development of HRM Programs in Business Schools
This appendix aims to discuss HRM and executive HRM programs for business schools to educate future human resource
professionals and managers.
Structure: Human Resource Program
This program is based on three majors: foundation, major, and specialization. Foundation courses are core business courses
such as marketing, management, and accounting. Major is built on HRM interests such as PM, international HRM, human
resource planning, staffing, training, etc. Elective courses enable HRM students to specialize on a business field such as
accounting, marketing, and management. Therefore, HRM students obtain a dual career opportunity: one is in HRM and the other
is in business.
HRM students should experience management courses and law courses. Because HRM professionals manage the relation
between employees and firm.
Courses
There are foundation, major, and specialization courses in this curriculum. The number of courses is 42, and credits to
complete this program are 168 credits. Each course is given to four credits.
Foundation courses are: management and organization, organizational behaviour, organizational psychology, strategic
management, business policy, introduction to business, international business, marketing management, principles of marketing,
principles of accounting, financial accounting, production management, business law I, business law II, quantitative methods in
business, principles of statistics, business statistics, research method I, research method II, principles of economy, micro-economy,
and macro-economy.
Major HRM courses are: PM, HRM, SHRM, international HRM, research method in human resource, human resource
planning, staffing, training, performance evaluation, reward management, career management, compensation, industrial relation,
and labor law.
The first two-year courses are business courses in the program, and the third- and fourth-year courses are HRM courses.
There are four elective courses in the program. Content will be developed later.
Table A1 show the curriculum.
Table A1
Curriculum
Fall Spring
The first year Principles of Management Business Statistics
(to be continued)
PROGRESS OF HRM TO SHRM: HUMAN RESOURCES AS “CAPITAL” 337
Principles of Economy Quantitative Methods
Principles of Marketing Financial Accounting
Principles of Accounting Business Law I
Principles of Statistics Macro-Economy
The second year Management and Organization Marketing Management
Production Management Strategic Management
Research Methods I Research Method II
Organizational Psychology International Business
Organizational Behaviour Labor Law
The third year PM Career Management
HRM Human Resource Planning
SHRM Staffing
International HRM Training
Research Method in HRM Performance Evaluation
Specialization I Specialization II
The fourth year Reward Management Human Resource Case Study Course
Compensation Industrial Relation
Job Health and Security Specialization IV
Specialization III Internship II
Internship I Internship III
Executive HRM courses (executive HRM) are built on core courses and career courses. This program (one year) is
benchmarked with current executive MBA programs in business schools.
There are five core courses, and there are nine career courses. Each course’s credit is six credits to complete. Total credit of
executive’s HRM program is 84 credits. Table A2 shows the courses.
Table A2
Executive HRM Courses
Courses Credits
Core courses
Management and Organization 6
PM 6
HRM 6
International HRM 6
SHRM 6
Career courses
Human Resource Planning 6
Staffing 6
Training for Development 6
Performance Evaluation 6
Compensation 6
Career Planning 6
Industrial Relations 6
Health and Safety 6
Labor Law 6
Total 84
Conclusion
This program and curriculum of undergraduate and executive HRM programs aim to educate future human resource
professionals.
