Abstract
The objective of this study is to argue transition from human resource management (HRM) to strategic human resource management (SHRM). In addition, this study also discusses the theory of SHRM. The research methodology of this study is based on arguments from SHRM literature. The significant of paper is a discussion of SHRM theory. Key terms are personnel, employee, and capital in management of human resources by firms. Practitioners call human resources as personnel in personnel management (PM); and call human resources as an employee in HRM. Practitioners do not clarify the term yet for human resources in SHRM. This paper suggests “capital” term for human resources in SHRM. Secondly, return on investment (ROI) of HRM might be positive organizational attitude and behaviours. HRM makes investment to employees, and ROI of HRM is important to SHRM because positive attitude and behaviours increase individual performance of employees. Thirdly, there is a triangular relation in SHRM theory. This is named as trigonometry of SHRM. There are dependent variables, independent variables, and moderators in this triangular. Finally, SHRM can be described with employee performance and firm performance relationship. In this relation, HRM practices lead to increased individual performance, and individual performance increases performance of business departments such as logistics, supply, finance, marketing, production etc. and performance of business departments has an impact on firm performance. In this SHRM model, HRM has an impact on firm performance through individual performance and business departments. All are described is SHRM theory in this study. For HRM case, HRM has two purposes in firm management. Those purposes are performance and recruitment. HRM aims to increase individual performance of employees. If HRM aims to increase firm performance through individual performance, it is description of SHRM. HRM has an impact on individual performance via HRM practices. HRM practices are keys to increase individual performance. Because employees implement business processes in firm management. Those processes are such as production, marketing, stock, supply, logistics, finance and others. Individual performance of employees increases performance of those business processes in firm management. Therefore, it is important to increase individual performance through HRM practices. This is a HRM theory in this study. Moreover, HRM does recruitment of employees for functioning these business processes. Because all needs human resources to effectively implement processes in firms.
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