What is Strategic Human Resource Management? A Detailed Explanation

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) Conclusion 

What is Strategic Human Resource Management? 

Strategic Human Resource Management (SHRM) is described as the process of handling Human Resources in a way that connects the workforce to an organisation's core strategies, objectives, and goals. It involves implementing practices that promote flexibility and provide a competitive edge for the organisation.   

Additionally, SHRM emphasises the importance of creating a workplace culture that aligns with the organisation's values and goals. By adopting SHRM practices, companies can enhance their business performance and achieve better results. It involves managing the relationship between employees and the organisation to create a positive work environment. 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: By aligning HR practices with employee needs and aspirations, strategic HR Management creates a work environment that enhances job satisfaction. This leads to happier and more motivated employees. 

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 manage 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 HR 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 is to 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 will be able to judge the abilities your company will require in the future, and 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 needed 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 

Once you have set the goals for your company and forecasted its future needs, it is time to implement your Strategic Human Resource Management Plan. The first step for most companies is to recruit suitable candidates, provide training and development, and then focus on performance management. However, this may vary based on the specific needs of your company. 

If you already have a large pool of talented employees, it may be better to cultivate their skills before recruiting from outside. If you still need to hire more employees, you should have clear expectations and skill requirements before starting the recruitment process. 

Once you have hired new employees, it is essential to have an appropriate onboarding process. This will help ensure that your new hires understand what is expected of them and are set up for success. After that, you should focus on their development by providing training programs and opportunities for professional growth. This approach helps to retain top talent and keep them engaged in their work. 

Finally, performance management is a crucial part of SHRM. It involves setting clear expectations, providing feedback, and conducting performance reviews. Performance management helps ensure that your workforce is meeting expectations and contributing to your company's bottom line. 

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. 

Conclusion 

We hope this blog offered a comprehensive understanding of what is Strategic Human Resource Management. SHRM empowers organisations to thrive by maximising employee engagement, optimising talent management, fostering adaptability to change, and driving exceptional organisational performance in the coming days. 

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