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.
Perspectives on strategic HRM
| Perspective | Idea | Associated with |
|---|---|---|
| Universalistic (best practice) | Some HR practices raise performance everywhere | Jeffrey Pfeffer's seven practices; high-performance work systems |
| Contingency (best fit) | HR practices must fit the business strategy | Schuler and Jackson; Miles and Snow |
| Configurational (bundles) | Coherent bundles of practices matter more than single practices | MacDuffie (1995); Delery and Doty (1996) |
| Resource-based view | People give sustained advantage when valuable, rare, hard to imitate and non-substitutable (VRIN); Barney later framed this as VRIO | Jay 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
| Element | Key point |
|---|---|
| Origin | David McClelland's 1973 paper 'Testing for competence rather than for intelligence' |
| Definition | Boyatzis: an underlying characteristic (motive, trait, skill, self-image, knowledge) linked to superior performance |
| Iceberg model | Spencer and Spencer: knowledge and skills above the waterline; self-concept, traits and motives below |
| Types | Core (organisation-wide), functional (job-specific), behavioural and leadership competencies |
| Steps | Job analysis → identify competencies → define proficiency levels → assess employees and find gaps → use for selection, training and pay |
| Tools | Behavioural event interview (McClelland and colleagues), assessment and development centres, 360-degree feedback |
Balanced scorecard perspectives
| Perspective | Question it asks | Example measures |
|---|---|---|
| Financial | How do shareholders see us? | Return on investment, revenue growth, economic value added |
| Customer | How do customers see us? | Satisfaction, retention, market share |
| Internal business process | What must we excel at? | Cycle time, quality, process cost |
| Learning and growth | Can 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).
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).
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.
The scorecard checks money, market, method and mind: financial, customer, internal process, learning and growth.