Introduction In the first chapter, we examined the theoretical debate on the nature and significance of the human resource management (HRM) model; in this chapter we explore an approach to HRM labelled strategic human resource management, or SHRM. By a strategic approach to HRM, we are referring to a managerial process requiring human resource (HR) policies and practices to be linked with the strategic objectives of the organization. Just as the term human resource management has been contested, so too has the notion of SHRM. One aspect for debate is the lack of conceptual clarity (Bamberger & Meshoulam, 2000). Do, for example, the related concepts of SHRM and HR strategy relate to a process or an outcome? Over the past decade, HR researchers and practitioners have focused their attention on other important questions. First, what determines whether an organization adopts a strategic approach to HRM, and how is HR strategy formulated? Of interest is which organizations are most likely to adopt a strategic approach to HRM. Is there, for example, a positive association with a given set of external and internal characteristics or contingencies and the adoption of SHRM? Another area of interest concerns the policies and practices making up different HR strategies. Is it possible to identify a cluster or bundle of HR practices with different strategic competitive models? Finally, much research productivity in recent years has been devoted to examining the relationship between different clusters of HR practices and organizational performance. Does HR strategy really matter? For organizational practitioners who are looking for ways to gain a competitive advantage, the implication of HR strategic choices for company performance is certainly the key factor. Before, however, we look at some of the issues associated with the SHRM debate, we need first to examine the strategic management process. This chapter also examines whether it is possible to speak of different models of HR strategy and the degree to which these types of HR strategy systematically vary between organizations. We then consider some issues associated with SHRM, including international and comparative SHRM. As for the question of whether there is a positive association between different HR strategies and organizational performance, we are of the opinion that, given the importance and volume of the research surrounding this issue, the topic warrants an extended discussion (Chapter 13). In the current chapter, we address a number of questions, some essential to our understanding of how work organizations operate in the early 21st century work and the role of HRM therein. How do big corporate decisions impact on HRM? Does the evidence suggest that firms adopting different competitive strategies adopt different HR strategies? How does HRM impact on the bottom line? There is a common theme running through this chapter, much of the HR research pointing out that there are fundamental structural constraints that attest to the complexity of implementing different HRM models. Strategic management The word strategy, deriving from the Greek noun strategus, meaning commander in chief, was first used in the English language in 1656. The development and usage of the word suggests that it is composed of stratos (army) and agein (to lead). In a management context, the word strategy has now replaced the more traditional term long-term planning to denote a specific pattern of decisions and actions 38 Human Resource Management Model of strategic management In the descriptive and prescriptive management texts, strategic management appears as a cycle in which several activities follow and feed upon one another. The strategic management process is typically broken down into five steps: undertaken by the upper echelon of the organization in order to accomplish performance goals. Wheelen and Hunger (1995, p. 3) define strategic management as that set of managerial decisions and actions that determines the long-run performance of a corporation. Hill and Jones (2001, p. 4) take a similar view when they define strategy as an action a company takes to attain superior performance. Strategic management is considered to be a continuous activity that requires a constant adjustment of three major interdependent poles: the values of senior management, the environment, and the resources available (Figure 2.1).