How Strategic is HRM

How Strategic Is HRM?i

Kathryn Martell and Stephen J. Carroll

This study of 115 subsidiaries of Fortune 500 companies indicates that a majority hadintegrated HRM and strategic planning systems within their organizations. HRM issueswere explicitly discussed in strategic plans; HRM executives were involved in the plan-ning process as "strategic partners"; and HRM was generally recognized as playing animportant role in implementing business strategies. The degree of integration present wasnot related to short-run firm performance, however, time lags may be a factor. Implica-tions of these findings are drawn. © 1995 by John Wiley & Sons, Inc.

INTRODUCTION

It will come as no surprise to the readers of this and other humanresource management (HRM) journals that there has been mountingenthusiasm for awarding HRM a more strategic role in organizations.Building upon the idea that human capital is one of the most criticalcomponents of strategic success for many companies, managers are be-ing encouraged to link specific HRM programs to strategic outcomes(Martell, Carroll, & Gupta, 1992; Schuler & Jackson, 1987; Miles & Snow,1984). By matching HRM with strategy, the critical human resourceskills, attitudes, behaviors, and performances that are needed to suc-cessfully implement strategies can be acquired, developed, motivated,and maintained (Wright & McMahan, 1992; Ulrich, Brockbank, & Yeung,1989; Schuler & MacMillan, 1984).

Following this logic is the conclusion that, since strategic success istypically measured in financial terms, in order for HRM policies to bejudged truly effective, they must contribute to the firm's bottom line(Thornburg, 1991; Walker & Bechet, 1991; Misa & Stein, 1983). This new,more proactive approach to HRM, linking it to both strategy and organi-zational performance, represents a shift from the more traditional viewof personnel that focuses on micro issues such as individual worker'sperformance and satisfaction. The term, strategic human resource man-agement (SHRM), has emerged and is frequently used to refer to thisnew approach to HRM.

This study explores how strategic the HRM function has become inactual practice in US corporations. Working from a database that in-

Human Resource Management, Summer 1995, Vol. 34, Number 2, Pp. 253-267© 1995 by John Wiley & Sons, Inc. CCC 0090-4848/95/020253-15

eludes data on HRM practices in 115 divisions of 89 Fortune 500 compa-nies, this study seeks to answer the question: "How strategic is HRM?"Specifically:

• How prevalent is SHRM in practice?• Has it produced the outcomes that proponents said it would?• Does SHRM elevate or diminish the role of HRM managers?

The effect that adopting a strategic approach to HRM has had onmanagers' perceptions of the effectiveness of the HRM function andHRM professionals will also be examined. The intention is that answer-ing these questions will help scholars move beyond theoretical frame-works and will provide managers with empirically based recommenda-tions on how HRM and strategy should be linked.

WHAT MAKES HRM 'STRATEGIC"?

Despite the popularity of the term, SHRM, a consensus on a defini-tion has not yet emerged, causing one group of researchers to lamentthat nearly "every author, teacher, and consultant" seems to offer apersonal conceptual model of SHRM (Milkovich, Dyer, & Mahoney,1983, p. 3). Certain themes have emerged from the existing literaturewitb enough regularity, bowever, to differentiate tbe strategic approachfrom the more traditional personnel function dominated by operational-level HRM activities. Exhibit 1 summarizes the components of theSHRM concept adopted in this study.

Our definition of SHRM includes the following characteristics: a long-term focus, linkage between HRM and strategy processes, and the ex-pectation that effective HRM policies should produce organizational per-formance benefits. Line managers, as well as HRM professionals, mayplay a role in transforming the HRM function to become more strategicin orientation; however, the extent of that roll is, at this point, unclear.The characterization of SHRM presented in this article has been drivenby the prescriptive literature; current empirical research does not clearlyindicate how prevalent SHRM models are in practice nor whether theyproduce the desired organizational outcomes.

THE STUDY

Overview

This study is an attempt to examine the prevalence of SHRM in prac-tice and to evaluate one of the principles that underlie a number of themore popular models of strategic human resource management: That

254 / Human Resource Management, Summer 1995

Exhibit 1. A working definition of SHRM.

Characteristics of Strategic HRM (SHRM):

A longer-term focus — an inclusion of multiple-year strategic plans for humanresource use is often considered the first step in the evolution of a strategically-oriented HRM function (Alpander, 1982).

New linkages between HRM and strategic planning — has emerged as a criticalelement in many models of SHRM (Thakur and Calingo, 1992; Golden andRamanujam, 1985; Nininger, 1982). One-way linkages focus on the role of HRMactivities in assisting strategy implementation (Devanna et al, 1984), while a two-way linkage describes a more proactive approach where HRM exerts influence onstrategy formulation as well.

Proposed linkages between HRM and organizational performance — Mostmodels of SHRM include the proposition that HRM plays a key role in theachievement of strategic goals. Since the expected outcome of company strategiesis an improvement in the firm's economic value, HRM must thus directlycontribute to the firm's "bottom line" in order to be judged effective (Walker andBechet, 1991; Misa and Stein, 1983).

Inclusion of line managers in the HRM policy-making process — Therecognition of HRM's strategic importance may make it more of a linemanagement responsibility (Brewster and Smith, 1990), particularly in areasinvolving the selection and compensation of managers (Martell, 1989). A CEO ofa large trucking company echoed this sentiment to us when he told us that "HRMis too important to be \eh to the HRM department."

adopting a more strategic approach to HRM improves organizationalperformance. It empirically examines the strategic importance of thehuman resource function generally, the linkage (integration) betweenhuman resource management and strategic planning systems specifi-cally, and the extent to which HRM systems' strategic properties affectcompany performance. The role of senior HRM executives within thefirm is also examined. The goal is to evaluate whether the enthusiasmfor elevating the importance of HRM is justified and whether it is rea-sonable to recommend that companies make the investment in revamp-ing their HRM systems to be fully integrated with the strategy process.

The Sample

The study includes 115 randomly chosen SBUs (strategic businessunits, typically divisions) from 89 Fortune 500 manufacturing firms. (The

Martell and Carroll: How Strategic 7s HRM? / 255

original mailing was 450, for a 26% response rate.) Descriptive statisticsof the firms participating in the study are provided in Table I. Since datawere being gathered on strategic variables and performance in additionto HRM unit characteristics. General Managers (GM) (the most seniormanager in the SBU) rather than HRM managers were surveyed. Gath-ering data from managers outside of the HRM function might also serveto improve the objectivity of measures related to the perception of theHRM function and its management. 2 (A second survey gathered datafrom Human Resource Managers to serve as a validity check on some ofthe HRM measures).

Measures

Most of the SHRM measures focused on the issue of the degree ofintegration between HRM and strategic planning processes. Respon-dents were asked whether HRM data or personnel were incorporated indifferent stages of the planning process. General Managers were alsoasked to characterize the role of HRM executives within the SBU gener-ally and in strategy formulation specifically, and the role of both thefirm's human resources (employees) and the HRM function in imple-menting SBU strategy. Data were also gathered on the role of the Gener-al Managers in HRM policy-making involving executives. Finally, datawere gathered on diverse organizational performance. A weighted aver-age was calculated, incorporating both financial and non-financial mea-sures.^ A copy of selected measures is included in the Appendix.*

Table I. Sample SBUs Descriptive Statistics (N = 115).

size

Mean: 4792 employees Standard Deviation: 8507Minimum: 4* Maximum: 50,000

* only 4 participating SBUs had less than 100 employees.

Industry classification

Industry % of

Food & kindredTextilesApparel & fabricPaper & alliedPrinting & publishingChemicals & alliedPetroleum refiningRubber & misc. plasticStone, clay, glass

Samole

6%2%3%8%1%13%1%3%4%

Industry % of

Leather productsPrimary metalsFabricated metalsNonelectrical machineryElectrical machineryTransportation equipmentScientific InstrumentsMisc. manufacturingWholesale trade

Sample

1%2%2%

12%12%6%

10%2%7%


RESULTS

The following conclusions are drawn from our analysis of the datacollected in this survey:

• Conclusion 1. HRM and strategic planning processes were linkedin most companies surveyed.

Our data indicate that there is linkage between the HRM and strategyprocesses in many Fortune 500 firms. As indicated in Table II, the rangeof participation in various linking activities ranged from 44% to 69%.Sixty-nine percent of companies in our sample include an explicit discus-sion of human resource issues in their strategic plans. In 68 percent ofthe companies surveyed, senior HRM executives contributed to the de-velopment of strategic goals and plans for the coming 3-5 years. Fiftythree percent of companies based their competitive strategy, in part, ontheir human resources. Human resource costs and implications wereexplicitly included in the evaluation of the costs and benefits of pro-posed business strategies in 52% of companies surveyed, and in 44% ofthe companies planning documents discussing human resource issueswere distributed to planners to be taken into account when formulatingstrategy.

These data, showing a pattern of clear linkage between the HRMfunction and strategy formulation, suggest that HRM has become strate-gic in perhaps the majority of Fortune 500 firms, more so than suggestedpreviously by other authors. Various authors propose multi-stage charac-terizations of HRM/strategy integration that range from the traditional

Table tl. Firms Participating in Activities Linking Strategy and HRM.

YES NO

Planning documents discussingHRM issues were distributedto planners 43.5% 56.5%

Strategic plans include anexplicit discussion of HRM issues 68.7% 31.3%

HR costs and implications wereexplicitly included in estimatingthe costs and benefits of alterna-tive strategies 52 . 2% 47.8%

SBU's competitive strategy is based,in part, on SBU's human resources 53.0% 47.0%

HRM executives participated in highlevel strategic planning meetings 67.8% 32.2%

Martell and Carroll: How Strategic Is HRM? / 257

bureaucratic approach that has no role for HRM in strategy formulationor implementation, to a fully strategic HRM approach that has the HRMfunction fully integrated with strategy processes.^ HRM/planning inte-gration is further refined as stage 1 or one-way integration—whereHRM practices are designed to advance strategy implementation—orstage 2 or two-way integration, where the HRM exerts influence instrategy formulation as well (Nkomo, 1980; Golden & Ramanujam,1985). Empirical research by the Conference Board (Janger, 1977), Al-pander (1982), Rowland and Summers (1981), and Tichy et al. (1984)found very low levels of HRM and strategy integration, particularly withregard to strategy formulation. Other studies (Golden & Ramanujam,1985; Baird, Meshoulam & Give, 1983) found some evidence of a one-way linkage between HRM and strategy processes, although two-waylinkages were not observed.

In contrast, our data reveal both one-way and two-way linkages be-tween the HRM and strategy processes. For example, circulating HRMplanning documents, including a discussion of HRM issues in the strate-gic plan, and considering HRM costs and other issues when evaluatingplans fall on the "low participation" end of the SHRM scale. Theseactivities are easily implemented and do not require active participationby HRM managers in the strategy process. On the other hand, basingthe company's competitive strategy partially on the firm's human re-source situation and including HRM executives at the table when chart-ing the company's future suggest closer integration between the HRMand planning functions. Alternatively, this approach also allows for theopportunity of a two-way linkage, where HRM exerts some influenceover strategy as well.

• Conclusion 2. The HRM function is important in implementingbusiness strategy, but not as important as other functions that di-rectly contribute to the development, production, or sale of theproduct.

Some proponents of SHRM argue that, due to the importance ofemployee inputs in implementing a firm's strategy, the HRM functionshould be elevated to levels of other more productive functions such asmanufacturing or R&D as is it in Japanese companies (Whitehall, 1991).Our data suggest that while senior management does acknowledge thatHRM plays an important role in strategy implementation, other func-tions are deemed more critical. As indicated in Table III, 37 percent ofGeneral Managers surveyed considered HRM to be very or extremelyimportant in implementing SBU strategy. These numbers pale beside theimportance of other functions, however, including R&D (58% consid-ered it very or extremely important), manufacturing (62%), or marketing(73%). On the other end of the scale, only 18 percent considered HRM to


Table III. The Relative Importance of H R M in Strategy Implementation.

The Importance ofFunctional Areas InImplementing Strategy:

Human Resource ManagementResearch & DevelopmentManufacturingMarketing

ExtremelyImportant

37%58%62%73%

Important

46%24%28%23%

Not VeryImportant

18%15%8%2%

Percent of Respondents strongly AgreeingWith tbe Following Statements:

"Obtaining and preserving the necessaryHUMAN RESOURCES is much more importantthan obtaining and preserving the necessaryFINANCIAL RESOURCES" 5.2%

"Obtaining and preserving the necessaryHUMAN RESOURCES is much more importantthan obtaining and preserving the necessaryTECHNOLOGICAL RESOURCES" 7.0%.

"Obtaining and preserving the necessaryHUMAN RESOURCES is much more importantthan obtaining and preserving the necessaryMARKETING RESOURCES" 8.0%

play a very small or no role in strategy implementation, compared with 8percent for manufacturing and 2 percent for marketing.

A second set of questions further probed General Managers' percep-tions of the HRM function. Seventy-nine percent acknowledged that theHRM function contributed to SBU performance goals which lends sup-port to the proposed link between HRM and organizational perfor-mance. Once again, however, comparative measures yield less supportfor the importance of the HRM function. Despite the repeated assur-ances by management in the press and other forums that "People areour most important resource," when compared with the types of re-sources more traditionally emphasized in the business environment—financial, technological, and marketing resources—only 5 percent, 7percent, and 8 percent (respectively) strongly agreed that obtaining andpreserving the necessary human resources was more important thanobtaining these three other types of resources.

There is good news and bad news for SHRM advocates in theseresults. On the positive side, the HRM function seems to be held inhigher regard today by senior management than is reflected in someearlier writings. The importance of the HRM function, however, andeven firms' human resources relative to their other resources, falls shortof what has been advocated by some of the more enthusiastic propo-nents of SHRM.


• Conclusion 3. Despite a relatively modest view of the importanceof the role of the HRM function, HRM executives were consideredvaluable members of the top management team.

It is interesting to note that senior management appears to distin-guish between the HRM function and HRM executives. While GMs gavethe strategic importance of the HRM function relatively low marks com-pared with some other functions, they clearly value the input of seniorHRM managers in charting the firm's strategy. In addition to the ques-tion on HRM managers' role in the strategy process, GMs were asked tocharacterize the primary role of their senior HRM executive as an admin-istrator focusing on operational issues, an expert providing advice onhow to implement business plans but not a full member of the topmanagement team, or as a full strategic partner who is an integral seniormember on the top management team actively participating in bothstrategy formulation and implementation decisions.^

In response to these questions, 58 percent of GMs characterized theirHRM managers as full strategic partners, compared with 22 percent and20 percent who considered them experts and administrators, respec-tively. In a related question, our survey found that 66 percent of GMsagreed that HRM managers have played a key role in designing plans toimplement the firm's strategic goals. These trends are encouraging forHRM professionals. While valuing HRM executives is not part of ourdefinition of SHRM per se, including HRM executives on the top man-agement team opens the door for many types of integration activitiesthat characterize SHRM. Furthermore, it helps ensure a role for HRMprofessionals in the process of adopting a more strategic perspective toHRM within the company.

• Conclusion 4. Line managers play a role in HRM policy-making,particularly those policies that involve senior managers.

In recent years, the role of top managers in influencing companies'fortunes has received attention in the media. The much publicized fir-ings of a number of the CEOs of some of the largest companies in theUnited States (US) reinforce the notion that the choice of men and wom-en to fill the top executive ranks is crucial to the firm's success. Yet, withthe exception of the recent interest in CEO pay, very little attention hasbeen paid in the HRM literature to how senior managers are treatedfrom an HRM perspective. Since there is some speculation in the litera-ture that the impact of "fit" between strategy and HRM is greatestamong top management employees and diminishes through lower orga-nizational levels based on employees' relative susceptibility to the envi-ronment (Schuler & Jackson, 1987; Dyer, 1984), the issue of who makesHRM decisions that impact senior managers was included in our survey.


We found that General Managers were the primary decisionmakersregarding the full spectrum of HRM policies that affect senior managers.As indicated in Table IV, GMs had shared or full responsibility for deci-sions regarding senior managers' salaries (90%), bonus awards (80%),how executives were selected (93%), final hiring decisions (94%), firing(93%), promotion (89%), how executive performance was evaluated(95%), the design of executive training programs (84%), and senior man-agement participation in training (92%).

• Conclusion 5. The integration of HRM and strategy processes isnot associated with improved short-term organizational perfor-mance.

SHRM proponents claim that adopting a more strategic approach toHRM should have a positive effect on organizational performance, andthere is some research to support this claim. (See Appendix A for defini-tion of organizational performance.) A study by A. T. Kearney consul-tants (Misa & Stern, 1983) found differences in the strategic orientationof HRM in highly productive companies when compared with other,less productive companies; Cook and Ferris (1986) reported similar find-ings when examining high performers in declining industries. Morerecently, Huselid (1993) found a positive correlation between sophisti-cated HRM management (which includes HR involvement in businessplanning) and financial performance measures.

Our data did not support such a direct relationship, however, sincenone of the SHRM measures included in our study were significantlycorrelated (p < .05) with organizational performance. Thus, while inte-

Table tV. General Managers' Role in HRM Decision-Making.

Decisions Concernina:Executives' base salariesExecutives' bonuses

Percent of GeneralCharacterized Their

HavingKo Input

3.5%4.3%

How executives are selected 1.7%Hiring executivesFiring executivesPromoting executivesHow executive perfonnance

is evaluatedDesign of executive

training programsExecutive attendance

at training programs

2.6%3.5%.9%

2.6%

3.5%

3.5%

AdvisoryOnly

4.3%13.9%4.3%2.6%2.6%8.7%

2.6%

11.3%

3.5%

Manaaers WhoRole As:

Shared CompleteDecision- Decision-Making

67.0%59.1%52.2%40.9%52.2%56.5%

34.8%

57.4%

41.7%

Making

23.5%20.0%40.9%53.0%40.9%33.0%

58.3%

27.0%

50.4%


grating HRM and planning processes may produce some other type ofpositive benefits such as improved communication, coordination, pro-ductivity, or quality not included in this study, our statistical analysis didnot support the proposition that in the short run adopting a SHRMpolicy will improve the firm's bottom line.

It would be premature to reject hypotheses of an SHRM-performancelinkage, however, based only on this study's findings. It is possible thatthere is a time lag before SHRM produces performance benefits, andgiven the relative newness of the strategic approach to HRM, it could bethat not enough time has passed for the SHRM practices measured inour study to have impacted performance. Once a company adopts anSHRM orientation and elevates the HRM function and managers inways discussed in this article, it still may take years before (1) HRMprograms can be linked to strategies; (2) these programs change employ-ee behaviors; and (3) these individual behaviors affect organizationalperformance outcomes. Our study may not have picked up the effects ofthis time lag; longitudinal studies are needed to shed some light on theeffect of HRM/strategy integration on performance over time beforedismissing this relationship.

CONCLUSIONS AND IMPLICATIONS FOR PRACTICE

This study of strategic business units of Fortune 500 companies indi-cates that HRM has taken on strategic properties in many large UScompanies. The study also indicates that strategic HRM (SHRM), aspracticed in companies today, consists of explicit discussions of HRMissues, costs, and resources when developing strategic plans and use ofHRM practices to implement strategies. In addition, it was found thattwo-thirds of companies surveyed involve their senior HRM executivesin high-level strategy meetings and consider these executives to be per-forming a strategic partner role as opposed to the more traditional HRMroles of functional administrator or expert. These findings also revealthat senior management views HRM executives more positively thanthey view their companies' HRM function as a whole.

These findings suggest that SHRM has become a reality in manyleading US companies. The prevalence of SHRM provides a contrast toearlier studies which found little integration between HRM and strategicplanning, and a minimal role for HRM in formulating and implementingbusiness strategy. The elevation of senior HRM executives to the role ofstrategic partner also differs from the somewhat negative images ofHRM by the rest of the organization that has been documented in otherstudies (Carroll, 1991).

There are several implications of these findings. First, HRM execu-tives in firms which have not accepted SHRM can point to these findingsin promoting to senior management the desirability of making better use


of HRM executives in the strategic planning process. One of the majorreasons why new HRM practices become established in companies is animitation or modeling effect. Thus, actual practices of other leading com-panies can add legitimacy to a proposed new approach to HRM in acompany which is lagging behind its organizational peers.

Second, senior HRM executives must now possess the skills andknowledge necessary to perform the new strategic partner role. HRMmanagers must prove that they are capable of performing these newadded responsibilities to maintain the elevation of the status of HRMexecutives. The highly specialized background of many HRM execu-tives, their lack of general business training, and the tendency of manyHRM departments to adopt a relatively passive role in relating to otherorganizational units (Carroll, 1991), compound this problem. MBA-leveltraining or participation in general management training (which couldimprove HRM professionals' understanding of the firm's internal andexternal strategic environments) may in the future become a prerequisitefor selecting senior HRM managers. It may be prudent for HRM manag-ers to retool now, in light of the trend toward strategic HRM uncoveredin this study.

In order to transform themselves into strategic partners, HRM man-agers will need to reevaluate their priorities. Previous studies indicatethat HRM managers place a much higher priority on short-term problemareas such as benefits administration and legal issues than on long-range planning or other strategic issues (Bureau of National Affairs,1990). Senior HRM executives must find a way to limit their participationin the day-to-day operating responsibilities that currently dominate theirschedules if they are to perform strategic functions. Increased participa-tion in senior management strategy formulation exercises may requiredifferent structural arrangements for the HRM function with more de-centralization and delegation. A strategic approach should also be adoptedin administering HRM programs—for example, adapting the firm's com-pensation programs to reward contributions to strategic goals.

Just as HRM executives are now participating in more general man-agement decisions, according to this study general managers are alsoheavily involved in HRM decisions concerning executives. Since mostGMs lack the "nuts and bolts" HRM training in selection, compensation,and evaluation techniques, this trend offers a new opportunity for part-nership between HRM professionals and line managers. HRM managerscan use the benefit of their expert knowledge involving assessment ofindividual characteristics, evaluation of performance, legal issues, andcompensation systems to advise GMs on how to select and motivate acadre of executives equipped to further the company's strategic goals.Once again, accepting this new responsibility may require a shift inorientation for many HRM managers who, historically, have focused onemployees at lower levels of the organization. There are new knowledgeand skill requirements in devising strategic HRM policies for executives


that need to be confronted if HRM professionals plan to advise seniormanagement on these issues.

The patterns identified in this study—the elevation of the importanceof the HRM funcfion within the firm, the role of GMs in determiningdiverse HRM policies, and increasing respect for senior HRM managers—offer an opportunity for a closer strategic partnership between HRM andline managers. Many GMs want HRM policies that further the firm'sstrategies, but lack the expertise to make this happen on their own.HRM professionals can serve as experts fo advise senior management onhow to use HRM as a powerful tool to bolster strategic performance.Our data on the rising influence of HRM executives in the strategyprocess suggest that this window of opportunity is now wide open.HRM professionals should make sure they have the necessary skills andmindset to exploit it.

Kathryn Martell is Assistant Professor of Management at Southern IllinoisUniversity at Edwardsville. She teaches primarily in the area of strategic man-agement. Her research, which focuses on strategy implementation, incorporatesa number of HRM topics including strategic HRM, executive HRM, sexualharassment, and the role of HRM in promoting business ethics.

Stephen /. Carroll is Professor of Management and Organization at the Univer-sity of Maryland. His previous books and articles on HRM topics have focusedon performance appraisal, the management of compensation, management byobjectives, Asian HRM systems, HRM unit roles and responsibilities, determi-nants of HRM practices, and individual differences in reactions to alternativeHRM systems.

APPENDIX A

Operationalization of Selected Study Measures

Organizational Performance

Please indicate (on a 1-7 scale ranging from "of little importance" to"extremely important") the degree of importance that your superiorsattach to each of the following performance criteria as they relate to yourbusiness unit:

sales growth rate new product developmentmarket share market developmentoperating profits R&D activitiesprofit-to-sales ratio cost reduction programscash flow from operations personnel developmentreturn on investment political/public affairs


In comparison with corporate expectations from your business unit,how would you rate (on a scale of 1-7, ranging from "nof at all satisfac-tory" to "outstanding") your business unit's performance along each ofthese dimensions:

sales growth rate new product developmentmarket share market developmentoperating profits R&D activitiesprofit-to-sales ratio cost reduction programscash flow from operations personnel developmentreturn on investment political/public affairs

A single weighted average was constructed for each SBU, using the"importance" rankings as criterion weights.

The Strategic Role of HRM Executives

Please indicate which of the following statements best describes thePRIMARY ROLE of the senior HRM/Personnel executive within yourbusiness unit:

[ ] FUNCTIONAL ADMINISTRATOR—maintains company andemployee programs, updates personnel files, keeps track ofgovernment regulations affecfing labor force policies, etc.

[ ] EXPERT—when solicited contributes expert advice and de-velops programs to help implement business plans. How-ever, he or she is not an integral part of our strategicmanagement team.

[ ] STRATEGIC PARTNER—he or she is an integral senior man-agement member on both a formal and informal basis andplays an important role in formulating and implementingbusiness unit strategy.

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ENDNOTES

1. This research was funded by a grant from the Society of Human ResourceManagement Foundation.

2. Of course. General Managers face severe time constraints and were expectedto be somewhat less interested in this topic than HRM managers; thus, one"cost" of our sampling strategy was a modest response rate. However, acomparison of industry and geographical data indicates that our participatingsample is representative of the polled sample, reducing the possibility of non-response bias.

3. A single measure of organizational performance was calculated for each SBUin the sample including the following performance dimensions: sales growthrate, market share, operating profits, profit to sales ratio, cash flow fromoperations, return on investment, new product development, market devel-opment, R&D activities, cost reduction, personnel development, politi-cal/public affairs.

4. For a complete listing of all the measures incorporated in this study, pleasecontact the authors.

5. Authors differ in their characterization of what constitutes a fully strategicHRM orientation. For example, Schuler and MacMillan (1987) foresee HRMplaying a role in establishing a company's competitive advantage, which is farmore progressive integration than that suggested by Mills (1979) who consid-ered the evaluation of the strategic implications of various HRM activities andpriorities to constitute full HRM/planning integration.

6. These roles are similar to those proposed by Holder (1986) who characterizedHRM managers either as "Types A" managers, who have a fair amount ofinfluence in the strategy process, have a good understanding of the firm'sbusiness, and are proactive in serving other functional managers as clients;and "Type B" managers, who fulfill the traditional role of being a functionaladministrator focusing on operational day-to-day HRM issues. Our data indi-cate that many HRM executives can be classified today as "Type B."


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