What is Strategic Human Resource Management?

Strategic Human Resource Management (SHRM) is the mastermind behind a company's workforce. It's all about using innovative strategies to manage and develop employees so that they can help the organisation achieve its goals. It acts as a strategic playbook for managing employees effectively.   

It is an approach that aligns human resource practices with an organisation's overall strategic objectives and goals. Thus, HR professionals must get familiar with this approach to drive organisational success. In this blog, we will learn how Strategic Human Resource Management involves a future-oriented process of developing and implementing HR programs that address and solve business problems. Read more to find out!  

Table of Contents 

1) What is Strategic Human Resource Management?

2) Why do we Need Strategic Human Resource Management?

3) Five Steps to Strategic Human Resource Management

4) Strategic Human Resource Management Examples

5)  Conclusion

What is Strategic Human Resources Management?

SHRM includes efficiently managing Human Resources to align the workforce with the core strategies of a company. It connects employee management to the company’s goals for long-term success. It also implements practices that promote flexibility, which help the company stay ahead in the competition.

Another important fact about SHRM is that it helps create a workplace culture that matches with the organisation's values and goals. By adopting SHRM practices, companies can enhance their business performance and achieve better results. It includes managing the relationship between employees and the organisation to create a positive work atmosphere. This includes the following:

a) Promoting effective communication 

b) Resolving conflicts 

c) Fostering employee engagement and satisfaction 

It is the process of proactively integrating HR strategies with the overall business strategy to optimise the utilisation of human capital. SHRM focuses on creating policies, programs, and initiatives that support the organisation's long-term goals and foster a competitive advantage.


 

Why do we Need Strategic Human Resource Management?

SHRM practices can help analyse employees and identify actions that add value to the company. Applying strategic HR management offers several advantages for businesses: 

a) Increased Job Satisfaction: Strategic HR Management enhances job satisfaction by matching HR practices with employee needs and aspirations. This results in employees who are happier and more motivated.

b) Better Work Culture: Strategic HR Management helps in building a positive work culture where employees feel valued, respected, and supported. This helps in promoting teamwork and collaboration.  

c) Improved Customer Satisfaction Rates: When employees are satisfied and engaged, it leads to excellent customer service with higher customer satisfaction rates.  

d) Efficient Resource Management: Strategic HR Management helps optimise the allocation and utilisation of resources, including human capital. This ensures that employees' skills and talents are utilised effectively, improving productivity and cost efficiency. 

e) A Proactive Approach to Managing Employees: Strategic HR Management takes a proactive approach to managing employees. It involves forecasting future workforce needs, identifying skill gaps, and implementing strategies to attract, develop, and retain talented employees.

f) Productivity Boost: By aligning HR practices with business objectives, Strategic HR Management enhances employee productivity. It involves setting clear performance goals, providing training and development opportunities, and implementing performance management systems that drive employee performance.

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Five Steps to Strategic Human Resources

One of the crucial functions of HRM involves providing an effective organisation's workforce management. Aspects like operational management, strategic management, and creating a plan that assists employees in evolving are taken into account. Implementing this involves defining the purpose of the Human Resource Strategy. 

Next, we will look at the organisational structure of the company and focus on aspects such as how many levels are within the organisation and whether the human resources department consists of classes. Let us look at some of the focus areas of Human Resource planning below:

a) Improve profitability through strategic planning 

b) Enhance customer service 

c) Improve employee morale and motivation 

d) Incorporate training and development opportunities 

e) Maintain quality standards 

Once the understanding of the organisational structure is clear and the outcomes are in focus. The following steps can be implemented in developing a strategic HR department:   

1) Know Your Company's Goals and Abilities

Defining goals is crucial to creating a Strategic Human Resource Management plan. It provides a clear direction to follow and a framework for measuring success. A goal is an objective that you aim to accomplish within a specific timeframe. It is something you strive to achieve. A plan is usually quantifiable. For instance, you may state, "I aim to enhance my sales revenue by 20% to gain a competitive edge." 

Goals can be divided into smaller sub-goals to make them more achievable. These intermediate goals act as stepping stones towards achieving the ultimate goal. They also serve as important milestones in the Strategic HR planning process. For instance, if your ultimate goal is to increase sales revenue by 20%, you can set intermediate goals such as: 

a) Achieving a 5% increase in sales revenue over the previous year 

b) Achieving a 10% increase in sales revenue in the fourth quarter 

c) Achieving a 15% increase in sales revenue during November 

When defining your Strategic HRM goals, it is crucial to develop a SWOT analysis. The SWOT analysis will help you identify potential threats or obstacles that may hinder organisational success. 

2) Forecast Future Needs

Do you want to ensure your company’s long-term growth and success? To do this, you need to estimate how many skilled workers you will need in the future and how they match with your current staff. This will help you to find out what skills your company will need in the future and how to train your staff to acquire those skills.

Considering the following can help you anticipate future needs: 

a) Skills your company may require in the future 

b) Number of employees required to fulfil that skill 

c) How does the current workforce compare to the anticipated workforce? 

By asking these questions, you can judge the abilities your company will require in the future. Based on that, you can cultivate a workforce with that skill set.

3) Determine the Resources Needed to Achieve Company Goals

After identifying the company's goal and forecasting future needs, the step involved is to determine the resources required to accomplish those goals. This involves determining financial resources, Human Resources, and any physical resources required. 

Consider the following questions to determine the resources required: 

a) Financial resources required to achieve your company's goal 

b) Human Resources required to achieve your company's goal 

c) Physical resources required to achieve your company's goal 

To determine the resources required to achieve your goals, it is necessary to conduct an audit of both internal and external resources at your disposal. This will give insight into the types of resources available and where you may need to supplement.

For instance, if you intend to expand your workforce, you might need to invest in recruiting programs. Alternatively, after evaluating your requirements, you may discover that your current workforce needs to gain the necessary skills to achieve your company's objectives, and training programs must be implemented. 

In the case of launching a new product, you must consider the financial resources required to develop and market it, as well as the physical resources needed to produce it. Talent and skill set must also be taken into account when introducing a new product. Do you have the right personnel in place to bring your product to market, and do they possess the necessary abilities to do so? 

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4) Execute Your Plan

After establishing the objectives for your organisation and predicting its upcoming requirements, the next step is to put into action your Strategic Human Resource Management Plan. For many companies, the initial process involves hiring the right employees, offering training and growth opportunities, and focus on performance management. Nevertheless, this could depend on the individual requirements of your organisation.

It might be more beneficial to develop the skills of your existing talented employees before looking to hire new ones if you already have a substantial pool of talent. Before beginning the hiring process, ensure to have precise expectations and skill requirements in place if you plan to bring on more staff.

Having a proper onboarding process is crucial after hiring new employees. This will assist in ensuring that your new employees understand what is required of them and are prepared to succeed. Following that, you need to concentrate on their growth through offering training schemes and chances for career advancement. This method aids in holding onto skilled employees and ensuring they stay involved in their job.

Ultimately, performance management plays a vital role in strategic human resource management. This includes establishing clear expectations, offering feedback, and performing performance evaluations. Performance management aids in verifying that your employees are achieving goals and adding value to your organisation's financial success.

 5) Assess and Pivot

After executing your Strategic Human Resource Management plan, it is crucial to evaluate and assess how well it is working. This involves analysing what is working and what is not. Based on the assessment, adjustments may be required to the plan. 

For example, if the expected results are not being achieved, recruitment strategies may need to be modified. Similarly, if the training programs do not yield the desired outcomes, changes may be necessary. 

It is essential to keep in mind that Strategic Human Resource Management is not a one-time process. As a company grows and evolves, the HR needs will also change. Therefore, it is necessary to review and update the Strategic Human Resource Management plan regularly to ensure that it remains relevant and effective.

Strategic Human Resource Management Examples

Strategic Human Resource Management plays a key role in helping organisations align their workforce with long-term business objectives. By integrating HR practices with corporate goals, companies can nurture a more productive, engaged, and innovative workforce. Let's explore two real-world examples of SHRM in action: Nissan and Brigham and Women's Hospital.

1) Example 1: Nissan

Nissan has implemented Strategic Human Resource Management to align its workforce with its corporate goals. Nissan focuses on continuous improvement and innovation to ensure its HR practices align with company goals. Key practices like talent development and performance management support its mission of producing high-quality vehicles. By aligning employee development programs with organisational objectives, Nissan has created a culture of innovation, which allows it to remain competitive in the global market.

2) Example 2: Brigham and Women's Hospital

At Brigham and Women's Hospital, SHRM is important in managing a highly skilled workforce in a complex healthcare environment. The hospital focuses on developing its human resources to meet its mission of delivering world-class patient care. HR practices such as leadership development, employee wellness programs, and continuous professional training are closely linked to the hospital’s strategic goals. This alignment ensures that the hospital maintains its high standards of care and operational efficiency.

Conclusion 

We hope this blog helped you understand what is Strategic Human Resource Management. SHRM empowers organisations to thrive by maximising employee engagement and optimising talent management. It also fosters adaptability to change and drives exceptional organisational performance in the long run.

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