Objective of this study is to argue transittion from HRM to SHRM. In addition, this study also discusses theory of strategic human resource management (SHRM). Research methodology of this study is based on argument from SHRM literature. Significant of paper is discussion of SHRM theory. Keyterms are personnel, employee and capital in management of human resources by firms. Practitioners call human resources as personnel in PM; and call human resources as employee in HRM. Practitioners don't clarify the term yet for human resources in SHRM. This paper suggests “capital” term for human resources in SHRM. Secondly, ROI of HRM might be positive organizational attitude and behaviours. HRM make 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 variable, 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 describe SHRM theory in this study. For HRM case, HRM has two purposes in firmal management. Those purposes are performance and recruitment. HRM aims to increase individual performance of employees. If HRM aim 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 key 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 HRM theory in this study. Secondly, HRM do recruitment of employees for functioning these business processes. Because all needs human resources to effectively implement processes in firms
