Note on the full policy structure for strategic human resource management


© May 2005, Graham R. Little

In the papers earlier in this series, I stated that the model in People and Profits was a SHRM model. After further reflection and implementing it in some businesses, I now correct that view as follows.

The full policy matrix for SHRM comprises three distinct but interrelated elements as follows.

1.       The model of People and Profits describes the crucial factors that a team leader must control if they are to achieve the best possible level of human performance (given the other two policy factors). The factors of this model are the necessary and sufficient factors that need to be controlled, and they are the factors offered in the OPD system of leadership that ensures optimum human performance and profits arising from that performance.

2.       Use of money: This involves two aspects:

         Wages and salaries.

         Performance pay.

3.   Staff benefits: the overall set of benefits the person estimates and receives from working in the firm.


Hertzberg two-factor theory remains the core model for understanding the SHRM policy matrix

These three policy factors interact. The most effective manner for understanding that interaction is to relate them to the Hertzberg two-factor theory of motivation.

Hygiene factors: make us dissatisfied in they are not present, but they do not provide fulfilment or satisfaction if they are. Hygiene factors in the policy mix are:

         Use of money in wages and salaries.

         Staff benefits.

It follows that a company that provides inadequate staff benefits, and are at the bottom of the salary range this will engender dissatisfaction in employees resulting in likely significant staff turnover and relatively low human performance no matter the quality of effort using the models in People and Profits and tools of arising from the model in the OPD system (at

Motivation factors: these are the factors that afford positive satisfaction. Within the policy matrix and the models of People and Profits, there are blended motivation factors.

         Direct involvement with the work through behaviours of success, involvement with setting current goals, creative input and involvement in work improvement.

         Clarity of performance assessment as distinct from success in form of results and numbers resulting in consolidated self esteem if one performs well, not eroded by shortfalls in results (which can happen through no fault of self).

         Direct and ongoing involving with boss.

         Growth and development of skills.

         And if as recommended there is a performance pay structure, tangible rewards for success driven by one own effort.

In summary, a firm needs to establish a competitive blend of wages, salaries, performance pay and benefits, then within this blend apply the models of People and Profits through the tools of OPD to then achieve best possible human performance.