What Is Strategic Human Resource Management? (2024 Guide)

Introduction to Strategic Human Resource Management

Everyone is familiar with the phrase, ‘on the ball’ and when you are, you are already doing a good job. This is the typical case of HR in most companies; they are recruiting candidates for specific job roles and all’s good.

But what about business strategy? Are their recruitment processes aligned with the business goals? Time to not just be on the ball, but get it into the goal, with strategic human resource management. This brings us to the definition of SHRM.

What Is Strategic Human Resource Management?

Strategic human resources management is a process that helps organizations manage their people better, and to align their roles and responsibilities with the business goals. It includes workforce planning and a long-term outlook on the performance of the employees, and rather than HRM which follows change and is reactive, strategic human resource management initiates meaningful change and is more proactive.

Importance of Strategic Human Resource Management

The significance of strategic human resource management lies in the fact that it not only tells you how to aim for something but also estimates what targets to aim for and justifies why to take aim. In this way, strategic human resource management becomes important – by developing an understanding of why an HR function is important, how to better use that function and for what purpose, and how to accomplish what you want to, in the best way possible.

Types of Strategic Human Resource Management

SHRM encompasses all functions of HR and adds much needed planning and strategy with a lot of analytics too to every aspect of HR. A such, SHRM encompasses the all the existing functions of HR, them being sourcing, recruitment, hiring, onboarding, performance management, appraisals, payroll management, training and exit interviews and compensations.

Objectives of Strategic Human Resource Management

SHRM is slowly gaining more popularity. The objectives of strategic human resource management are many. But there are some few key ones from a strategic perspective. They are:

1. Increasing the overall ROI of the company

This depends on a lot of factors but by getting the basics of HR right, you can significantly progress towards improving the profitability of a company.

2. Increasing the productivity of the employees

Employees who are not performing well are a liability to the company, but they must be offered the chance to redeem themselves. Making use of productivity monitoring tools is known to impact productivity in a positive way, so we encourage HR teams to use them to manage productivity in organisations.

3. Addressing external factors

Government policies and the changing business and regulatory environment can affect the way a business works and will impact then how strategic human resource management must work to bring the business back on track.

A good example of such strategic human resource management is instituting apprenticeship in your company (in line with government regulations) to also improve the quality of work and productivity.

4. Addressing internal factors

Cultural competence and quality of work are two internal factors affecting the business that the strategic human resource management team can investigate, to work on and improve. Cultural competency can be improved by group activities, emotional intelligence workshops etc.

5. Reducing attrition in leadership and key roles

You do not want your leaders to desert you in a crisis. You can ensure that they stay on by giving them the benefits and the respect they deserve. Encourage them also to share their knowledge with other employees in the company to ensure that there is transference of expertise and that everyone and the company as a whole benefit from it.

6. Approving attrition in areas that need lesser resources and have automation

If a department’s work or services can be automated, then try to implement it in your company to save costs and to improve the efficiency of processes and reduce the risk of human error.

There will be attrition resulting from this which as a person in strategic human resources management you will need to manage with great care and thought put into it.

Functions of Strategic Human Resource Management

Employee Engagement

The emotional and professional connection employees have with their jobs is called employee engagement. Employee engagement directly translates to increased productivity and an improved work environment too.

To improve employee engagement, the communication to the employee must be perfect and he/she must be compensated and provided a great work environment.

Employees with a high level of engagement show a higher productivity, put in more time on the job, receive performance appraisals and contribute to the growth of the company.

Establish best practices

Be transparent about what HR practices exist in the company. Have a code which everyone needs to adhere to.

Have specific rules for how employees must conduct themselves in the workplace, including a dress code, a code of ethics, policies on smoking and how to maintain workplaces, bathrooms, and cafeterias.

Teach HR tools and techniques

The HRMS is a set of tools or software that helps manage the HR functions in a company. One of the functions in SHRM is training HR professionals and employees on how to use the HRMS.

HR teams would be familiar with the HRMS operations of managing employee requests and concerns and employees will be accessing it probably through a self-service portal.

Improve process efficiencies

Operational efficiencies can be improved by HR through training and development programs, industry mentorship, and through webinars and by having team leaders encourage their members to put in extra hours or give incentives for that.

Through a culture of enrichment and enhancement, employees contribute more in far less time, working smarter than harder, improving efficiencies in operations and putting the company on a much faster trajectory to monetary growth.

Publish Research

Let your stakeholders and decision-makers know how well HR is managing its functions. Strategic human resources management can help understand the HR processes that are contributing, get the numbers on them, and present them in a meaningful way.

The presentation of data happens through data visualization to the decision-makers in the company, making the whole process of research a lot more streamlined and accountable in the company and collecting data that can and will impact decision-making in an emergency or crisis.

Characteristics of Strategic Human Resource Management

The features of SHRM set it apart from HRM. The following are the four main characteristics of strategic human resource management:

1. Human resource policies are to be matched with the pursuit of intellectual and cultural excellence in the company.
2. Several HR practices are connected in an organizational framework so that they can all support each other for business growth.
3. The day-to-day activities of HR will be managed by entry level positions whereas the more strategic roles will be managed by those at higher levels.
4. Establishes a connect between the mission and vision of the company, the values it stands for, and the environment and people it hopes to support.

How Does SHRM Work?

There are five steps in the strategic human resource management process. The steps are:

Scanning the Environment

Both internal and external factors affect an organization. The external factors such as political, cultural, economic, and technological all impact the organization significantly and it may or may not be within the organization’s purview to address all of them. Compliance is the only way. The internal factors such as organizational culture and hierarchy and business processes are within the control of the organisation, and must all be addressed as early as possible.

Identifying competitive advantage

Before you learn how you can improve the internal factors such as organisational culture, you need to know where your competitive advantage lies. So where does the competitive advantage lie. Is it customer service, branding, delivery, or pricing? Or is it something else? Once the competitive advantage is identified, you could conduct research on how to amplify it further.

Identify HRM Strategies

There are four strategies for any organisation to enrich employee capabilities. The are:

1. Devolved Informal Learning: Employees are made aware of the learning process and opportunities to develop their careers.
2. Learning as Socialization: Conducting training programs, courses and assessments to ensure that the employees are not only learning to do their jobs better but also to abide by the rules placed in the company.
3. Engineering: Engineering focuses on developing communities and social networks around your employees so that they can all work together better as a team.
4. Empowered Informal Learning: The HR department develops strategies to increase awareness and to make changes in the work environment to facilitate learning and development.

Implementing HR Strategies

Here begins the process of implementing the HR strategies. Once you have decided on what to do, it’s necessary to look at plans, policies, and other limitations.

Monitoring and Evaluating

How well is the HR strategy you developed doing in the company? Is there anything you must do to make it work better? How easy or difficult is it to improve it? These are some of the questions you must answer in this stage. Take a look at the performance targets and evaluations, the deviations from the ideal, and how to modify them.

Benefits of Strategic Human Resource Management

SHRM is very beneficial to any organisation. It promotes organisational agility, scalability, and innovation. Let us look at some of the most important benefits of strategic human resource management.

Company goals are achieved faster

Strategic HRM helps boost the bottom line, improves working conditions, and even helps with sustainability initiatives as employees now have more time to volunteer for environmental and community initiatives.

Speedier conflict resolution

Conflicts between employees, between employee and company, and between company and vendors can be resolved much faster.

Improved employee morale and productivity

The employee morale goes up and employees become more productive. They work with less stress and are also able to leave their comfort zone to take on new challenges.

Improved career growth for each employee

The training and development programs implemented help ensure that the employees establish themselves well in the company, distinguishing themselves based on their skills and achieving higher positions with their skills and their intelligence levels.

Improved implementation of HR tools

The IT literacy in the company goes up as more and more people become well-versed with tools that help them achieve their goals and contribute to the company effectively, securing more appraisals, lesser backlogs, and better communication and collaboration with their teammates.

Promotion of company ethos and values

The company culture and values become so popular that even competitors look up to it. This is the position that every organisation hopes to achieve. To do this, it must promote the values it stands for in social media, through offline activities and at exhibitions.

Evaluation of Strategic Human Resource Management

The evaluation of the strategic human resource management process begins with understanding, analysing and then making changes to work the internal factors in your company’s favour. For instance, you find on analysing that the productivity of the employees is very low.

Is there an improvement in your HR strategy that could possibly help you improve employee productivity? Requesting the manager to give more timely feedback to their employees can improve their productivity.

Sometimes you may find that diversity is lacking in your team. Incorporating diversity can help build a more empathetic and supportive team. You may also need to adjust your brand voice and what your products or services stand for accordingly.

Are you looking for a strategic human resources partner?

If the answer is yes, then you need to be on the lookout for a human resource consulting firm that aligns with your business goals. No matter whether you are a small business or an MNC looking to further expand, you cannot accomplish any kind of business growth without the right people.

Alp Consulting can help you with all your recruitment and staffing needs. Add on compliance management and other advisory services and you have a partner who manages the entire HR lifecycle.

Talk to Alp Consulting today for more info.