Strategic human resource management (SHRM) is a future-oriented, pro-active management planning that is a bridge between business strategies and human resources management. Before evaluating and arguing upon what SHRM is, let’s first understand the concept of Human Resource Management.
The theory of Human Resource Management has changed dramatically over the past few decades. Contradicting to the present scenario, HR management focused on day-to-day responsibilities such as managing employees’ duties, employee recruitment, and employee benefits.
However, the changing labor market has brought huge changes in how a company operates. Today, new companies have embraced innovative business thinking, first-hand strategies, and cultural leadership policies. With the upgradation of old-school business policies, there has been a drastic change in strategic planning, employee appointment, and functional decision making.
Consequently, HR professionals are accepting a strategic planning process to achieve long term objectives. Human Resource departments are now readily overcoming stereotypical negative views of the HR functions.
It won’t be wrong to say that HRM is a conventional business management formula that implies the implementation of principles for managing the workforce. The term is concerned with the process of hiring, developing, and retaining manpower in an organization. However, with the introduction of current modified policies, HR management has earned reformation, popularly known as Strategic Human Resource Management.
What is Strategic Human Resource Management?
Popularly understood as a restructured Human resource Management, strategic HRM is a proactive management function, vested in managing the workforce. Shortly known as SHRM, this function of management entails the development of management programs, policies, and human resource practices.
Strategic HR management was triggered in 2000 with Dave Ulrich’s challenge to the HR profession. According to Ulrich, the HR profession was value-adding to business, hence required strategic planning, innovative ideas, and proper recognition.
› Strategic HR Management Definition
Simply put, Strategic Human Resource Management is a bridge connecting HR and its objectives, goals, and strategies. The aim of strategic HRM is to achieve the strategic objectives of an organization;
• Improve business work culture
• Develop organization practices
• Advance strategies and innovative ideas for competitive advantage
Profound business experts have defined SHRM with varying perspectives. The most popular strategic HR management definitions are;
• According to Gary Dressler, “Strategic Human Resource Management means formulating and executing human resource policies and practices to produce the employee competencies and behaviors that company need to achieve its strategic aims.”
• According to Storey, SHRM is a distinct approach to employment management that seeks competitive advantage through the highly strategic deployment of proficient a workforce. The development is integrated with an array of structural personnel techniques which may include developing organizational designs, building and maintaining work cultures, and promoting team members.
In today’s dynamic world, no strategy, how well designed will work unless there are the right people with the best skills, in the right role. Attracting well-talented employees with the right behavior is the most challenging task for an organization which is quite a challenging task.
As suggested by Henry Pettigrew, Strategic HR management and planning states as a planning, a coherent approach to design and management of personal. The function is about matching HR activities and policies to some explicit business strategies.
SHRM is concerned with the development of distinctive capabilities and human capital requirements. According to expert management professionals, strategic HRM and planning is a patterned human resource development activity that intends to enable an organization is achieving its goals by building employment relationships, performance management, and employee relations.
Why is strategic human resource management important?
Strategic HR management is described as a functional plan for supporting organizations by managing resources and develop employee relations with a strategic framework.
› Importance of strategic human resource management
Predominantly, human resource management emphasized recruiting strong employee power for the business. However, with epic changes in the management structure, as recognized by Ukerich, HR management has evolved as a powerhouse to face challenges and a fast-moving business landscape.
Below are the benefits of strategic human resource management and why it is important for a thriving business.
› Connecting people with organizational goals:
The most prized possession for a company is- its people. Strategic human resource management is directly concerned with growing business through smartly adapting organizational culture in line with current commercial trends.
Competitive labor, regressive social changes, and digital disruption play important factors in growing business successfully. SHRM helps the business in coming up with competence to the sudden changes and motivates the employee from time to time.
Recognizing organizational goals and bringing employees to work together incompetence with new ideas is the major advantage of Strategic HR management and planning.
› Building an adaptable and balanced workplace:
A workforce equipped with a smart, digital platform to accumulate the latest trend is important for every single business. The strategic HR managers grease the workforce wheels to ensure employees are adaptable to the latest changes more rapidly. Learning and development is the main key to build an adaptable and balanced work structure.
Motivating employees to speed up their workability, innovate and bring up new ideas, embrace a digital transformation can lead to drastic positive changes. In addition to bringing digital transformation, the McKinsey report concludes that balancing friction and eliminating gender diversity is another priority for HR management.
In the past years, the definition of Strategic Hr management and planning has left a drastic positive impact on staff retention figures. The management has recognized the chief areas of focus among which building critical skills, competencies for the company, improving the employee experience, and strengthening current and future leadership are the major pointers.
› Appointing the right workforce at the right time, right place:
Ever thought about the consequences of appointing an accounting expert in the marketing department and vice-versa? Equipping the right work professionals at the right place is equally important in compliance with implying digital transformation. What is more significant is to deploy the right leaders at the right place.
According to Gartner, half of the HR managers today face the struggles of appointing leaders at an organization. Not yielding the right leaders at the right time may lead to consequent damages to the organization in the future.
The strategic HR management and planning department is proactive. It accesses organization goals, identifies changes, employee ability, and embraces innovative ideas to deploy employees at the right workplace. Rather than opening out vacancies for leadership level, the strategic hr management takes steps to evaluate the skills of current employees and promoting them.
› Employee engagement
According to various studies, the current workforce lacks motivation, and engagement towards the organizations they work. Hardly, 8%-10% of employees put discretionary efforts and high intent to stay back in their job.
Strategic HR and planning management along with managing department enforces proactive and clever initiatives to shine a light on the employees. Strategic hr management benefits organizations in many significant ways. Noting performances, awarding employees through gift cards, charitable donations and offering travel vouchers are few tricks to motivate employees and escalate high-level performances.
What is the Strategic HRM process?
An organization is more likely to achieve success when the team works towards attaining the same objectives and goals. Otherwise recognized as the key for retention and development of the quality team, the functions of strategic human resource management are elaborately noted by the likes of management experts.
Here is listed important strategic HR management process that acknowledges the concept of the strategic human resource management process.
› Scanning both internal and external work environment:
Scrutinizing influencing factors is an essential part of achieving organizational goals. The strategic HR management process begins by scanning internal and external factors, collecting information on immediate competitors, and identifying the work skills of the staff members.
The internal factors include organizational hierarchy, business process, SWOT analysis, improving industrial relations, and central work culture that plays a crucial role in performing business operations.
The external factors encompass competitor analysis, market demands, political, technical, socio-cultural, and economic factors that affect the functioning of the business.
Additionally, the concept of the strategic human resource management process is about scanning candidate resumes, identifying staff skills, compensation level, reasons for an exit, and other relevant factors.
› Identifying parameters of competitive advantage, evaluate HR capabilities
The strategic HR department not only identifies the factors influencing the achievement of organizational goals but also identifies the parameters of competitive advantage. The restrictions faced by company’s leads to diverse effects on product quality, customer service, brand positioning, pricing, and delivery.
Conducting workshops, efficient training programs helps in gaining a competitive advantage. Strategic learning platforms are introduced to enrich staff skills, evaluate them according to their capabilities.
HR departments may take skill inventory for every employee that helps in discovering their expertise in various areas. Performance review programs are conducted from time-to-time to identify the employees’ interest in a particular aspect of the organization.
› Identifying HR management strategies
The functions of strategic Human resource management include implementing strategies to enrich employee’s capabilities. Among the diverse strategies, there are major four strategies undertaken by the strategic HR department- learning as socialization, devolved informal learning, engineering, and empowered informal learning.
The strategies include identifying learning and training techniques, introducing coaching sessions, conducting education programs, to help the employees meet organizational goals. The strategies also help in making the employees aware of various opportunities, focus on creating social networks.
Additionally, the HR department ensures timely development of learning techniques, designing new tasks, creating provisions of shared space, and providing new work areas.
› Implementation of HRM strategies
After identifying various eligible HR strategic requirements of the company, it’s time to equip the business with a smart workforce. Future growth is the relevant goal of every business, which can be achieved by implementing strategic planning and management only.
The strategic human resource management steps planning begins with searching for skilled candidates. The recruitment stage succeeds with interviewing and selecting candidates. At this stage, interviewers vent questions related to salary expectations, skills, understandability of goals, etc. Relevant tests are used to access suitable candidates.
On completion of the interview process, strategic HRM carries out appropriate background checks. This is carried forward by planning employee onboarding programs and training packages. This helps in increasing employee retention and keep them engaged.
› Monitoring and evaluation of corrective action
Monitor and evaluation are among the last but most important strategic human resource management steps. Comparing and evaluating the HR strategy performance is vital to understand the outcome of implementing these strategies.
The strategic human resource steps may include establishing the performance target, tolerance levels, analyzing deviations, executing modifications, and establishing standards. The reviews are measured to implement corrective actions to achieve company goals.
In addition to the above-mentioned steps, companies may follow strategic human resource management examples of other developing organizations. Walmart, Nissan, FedEx, Alliance Boots are few such strategic human resource management examples that align with overriding strategies.
The strategic managers study the examples on how to achieve operational success through investing in training and earning of employees.
What is the difference between HRM and strategic HRM?
The term HRM and Strategic HRM are commonly mistaken to be the same. Although they are similar but far apart. HRM vs SHRM largely differs in terms of focus objectives, responsibilities, and accountability.
› Definition of HRM
HRM or Human resource management is concerned with the process of hiring, retaining, developing, and making the manpower efficient. It is implied as to the simple process of handling and managing human resources in a company.
The process is a systematic way to maximize employees’ performance by applying all possible technics to make them productive and efficient.
The functions facilitate human-oriented activities like planning, recruiting, training, development, performance appraisal, developing industrial relations, and so on. It is also about monitoring, managing relationship, staffing, evaluating, and managing employees.
› Definition of SHRM
SHRM or Strategic human resource management is a complex feature integrated into the company. This feature is about aligning the human resource with attaining company goals. SHRM is a management function that entails policies, practices, and planned programs related to the implementation of human resources.
The primary purpose of SHRM is to improve business performance and maintain an effective work culture. The main aim of SHRM is to adjust HR strategies into the peripheral of the company policies and ensure the achievement of business objectives.
Difference between traditional HRM vs Strategic HRM
• Firstly, traditional HRM vs strategic HRM differs in terms of their meanings. The former is a traditional method of managing people and undertaking business activities to achieve short term goals. Strategic HRM is a professional, modern approach to develop and manage human resources and plan strategies.
• HRM vs SHRM can be understood by its differing objectives. HRM selects and compensates employees based on their performances. SHRM aims at improving the efficiency and effectiveness of employees to achieve future goals.
• SHRM includes selection, training, development, appraisal, promotion, compensation, motivation, and retention of employees. However, HRM is only about recognizing candidate skills and appointing them in the company.
• Under traditional HRM, employees are treated as hired workers. They lack respect and deep care. However, Strategic HRM is about treating employees as paid partners. This develops a sense of respect and motivation towards their work. The employees treat the company as their own and work towards its improvement.
• The primary element of HRM is the capital and products. Conversely, SHRM focuses on building a company profile, its people, and blocks.
• Conventional HRM is cost centric. Unlike strategic HRM which is an investment to the company.
• HRM is a reactive function. On the other hand, SHRM is a proactive business management function.
• Companies with the short-term goal may choose traditional HRM over SHRM. The reason for HRM vs SHRM largely because the latter supports long-term goals.
Strategic Human Resource Planning and Management is an important aspect of a futuristic growth-oriented company. A company doesn’t need to increase the number of employees but consider implementing strategic HRM principles. Companies that do not have in-house SHRM facilities may outsource the functions, considering its importance in building a strong business establishment.
To be successful, firms must closely align with strategic human resource management (SHRM) with environment opportunities, business planning, and distinctive competence. SHRM is proactive, which means it helps in developing a vision of how the company wants to invest its human resources.
Strategic HR planning helps in developing and planning a focused set of objectives that capitalizes talents in the future. Strategic HRM helps in stimulating critical thinking and developing new initiatives.