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Unit III · Strategic HRM and industrial relations
9 min readConcept sheetMCQ · perspectives, models and BSC

Strategic role of HRM, competency mapping and balanced scorecard

SHRM aligns people practices with business strategy. Competency mapping defines the skills each role needs, and the balanced scorecard measures performance from four perspectives.

Balanced scorecardKaplan and Norton (1992): financial, customer, internal business process, learning and growth
Competency (Boyatzis, 1982)An underlying characteristic causally related to effective or superior performance
Iceberg modelSpencer and Spencer (1993): knowledge and skills visible; self-concept, traits and motives hidden
HR scorecardBecker, Huselid and Ulrich (2001): links HR measures to strategy

Perspectives on strategic HRM

PerspectiveIdeaAssociated with
Universalistic (best practice)Some HR practices raise performance everywhereJeffrey Pfeffer's seven practices; high-performance work systems
Contingency (best fit)HR practices must fit the business strategySchuler and Jackson; Miles and Snow
Configurational (bundles)Coherent bundles of practices matter more than single practicesMacDuffie (1995); Delery and Doty (1996)
Resource-based viewPeople give sustained advantage when valuable, rare, hard to imitate and non-substitutable (VRIN); Barney later framed this as VRIOJay Barney (1991)

Strategic role of HRM

  • Wright and McMahan define SHRM as the planned pattern of HR deployments and activities that enables an organisation to achieve its goals.
  • Golden and Ramanujam's levels of HR-strategy linkage: administrative, one-way, two-way and integrative.
  • Schuler and Jackson: a cost-leadership strategy needs efficiency-focused HR; innovation needs risk-taking and long-term focus; quality enhancement needs commitment and training.
  • HR moves from administrative support to strategic partner (Ulrich), measured through an HR scorecard.
  • Human capital is the knowledge, skills and abilities of people that create economic value.

Competency mapping

ElementKey point
OriginDavid McClelland's 1973 paper 'Testing for competence rather than for intelligence'
DefinitionBoyatzis: an underlying characteristic (motive, trait, skill, self-image, knowledge) linked to superior performance
Iceberg modelSpencer and Spencer: knowledge and skills above the waterline; self-concept, traits and motives below
TypesCore (organisation-wide), functional (job-specific), behavioural and leadership competencies
StepsJob analysis → identify competencies → define proficiency levels → assess employees and find gaps → use for selection, training and pay
ToolsBehavioural event interview (McClelland and colleagues), assessment and development centres, 360-degree feedback

Balanced scorecard perspectives

PerspectiveQuestion it asksExample measures
FinancialHow do shareholders see us?Return on investment, revenue growth, economic value added
CustomerHow do customers see us?Satisfaction, retention, market share
Internal business processWhat must we excel at?Cycle time, quality, process cost
Learning and growthCan we keep improving and creating value?Employee skills, training hours, staff retention, information systems

Balanced scorecard cause-and-effect chain

Kaplan and Norton later drew these links as a strategy map (2004).

How NET asks this

NET asks you to name the four balanced scorecard perspectives, match SHRM perspectives with their ideas, and recall who defined competency (McClelland, Boyatzis, Spencer and Spencer).

Exam angle

Typical MCQ: “Name the four perspectives of the balanced scorecard.” Financial, customer, internal business process, learning and growth. Trap: 'employee' and 'competitor' are not separate perspectives.

Typical MCQ: “Which part of Spencer and Spencer's iceberg is easiest to develop?” Knowledge and skills, above the waterline. Trap: motives, traits and self-concept are hidden and hard to change.

Remember it

The scorecard checks money, market, method and mind: financial, customer, internal process, learning and growth.