A Comprehensive Guide to Strategic Human Resource Management

What Is Strategic Human Resource Management (SHRM)?

Strategic human resource management, often abbreviated to SHRM, is a relatively new field in the HR industry and branches from the parent discipline of Human Resource Management. SRHM provides a structure that bridges the gap between people management and the practices developed to meet long-term business goals and objectives. SHRM is seen to go beyond traditional HR strategies and has a wider reach throughout an organization.

SHRM primarily focuses on proactive planning of resources within the context of an organization's goals, but it can also encompass various other aspects of employee development and utilization.

As a result, the SHRM and its outcomes will also inform other HR strategies that all work towards the business objectives defined at the outset. There is no one-size-fits-all when it comes to SHRM, but there are some definitive key features that all strategies should include. This article aims to take a closer look at what SHRM entails, its importance, the benefits, and steps for an effective SHRM.

The formal definition of strategic HRM is not always easy to give due to the simple fact that the process itself is complex, broad, and constantly evolving. SHRM is generally a hot topic in HR circles and is subject to continual debate and discussion amongst academics, professionals, and commentators. Its relationships with other aspects of business strategies and planning have divided opinions.

The concept of SHRM was conceived in the early 1990s, where a few formal definitions by scholars were proposed. These were:

1. The undertaking of all those activities affecting the behavior of individuals in their efforts to formulate and implement the strategic needs of a business (Schuler)
2. The pattern of planned human resource deployments and activities intended to enable the organization to achieve its goals (Wright and McMahan)

Alternatively, Boxall and Purcell described SHRM as a discipline concerned with explaining the influences HRM can have on organizational performances. They also believe that there is a fundamental difference between strategy and strategic planning and stated the following definitions:

1. Strategic planning - the formal process that takes place, usually in larger organizations, defining how things will be done.
2. Strategy - exists in all organizations (even if it's not written down and articulated) and defines the organization's behavior and how it attempts to cope with its environment.

An effective strategic human resource management should aim to:

• Develop flexibility, innovation, and competitive advantage
• Develop a suitable organizational culture
• Improve business performance

It is then easy to deduce that SHRM will include a number of individual HR strategies and processes. Hence, strategic HRM is an overall framework that shapes and delivers these individual strategies by systematically linking employee growth with company growth. SHRM centers around meeting the employees' needs, who in turn meet the company's needs by successfully accomplishing company goals and objectives.

Why Is Strategic human resource Management Important?

Machines need to be well-oiled and must receive regular maintenance for them to run smoothly. A company, in some respects, is just like a machine, and strategic HR is the oil and maintenance that allows the company to operate efficiently. The likelihood of success is maximized when all teams and departments are working harmoniously towards the same objectives. Analysis of employees will reveal insights that will help to determine the best course of action required to increase their value to the company and identify weaknesses in the workforce that need to be addressed by HR. 

Benefits of Strategic HRM

There is an abundance of benefits that successful SHRM can bring; some of these are:

• Identifying and analyzing external opportunities and threats that may impact a company's success
• Providing a clear business strategy and vision for the company's future
• Supplying competitive intelligence that’s useful for the strategic planning process
• Recruiting, retaining and motivating employees
• Developing and retaining highly competent employees
• Ensuring issues with employee development are addressed systematically
• Supplying information pertaining to internal strengths and weaknesses of the company
• Meeting expectations of customers effectively
• Ensuring high productivity
• Ensuring business surplus through competency

Steps to Strategic Human Resource Management

As a rule, strategic human resource management should be uniquely tailored in accordance with the context, culture, and objectives of a company, all the while considering any limitations and individual factors that may come into play. However, there is a need to create a strategic planning process before an SHRM can be functional. Steps for this should include:

1. Developing a thorough understanding of your company's objectives

To determine the success of a strategic HRM, company goals and objectives must first be clearly and thoroughly defined and understood. This will then give an indication of how well the proposed strategies align with these objectives. Being able to unambiguously articulate both short and long-term plans to relevant personnel will also ensure a more effective formulation of resource management strategy.

2. Evaluating your HR capability

By evaluating your HR capabilities at present, you will be able to ascertain how best to utilize your workforce in accordance with fulfilling the company goals and objectives. You may undertake a skills inventory for every employee to gauge a better understanding of their knowledge and competencies that can assist you in making more informed deployment decisions.

In addition, it can also help to identify any desires employees may have to be trained in a particular area of expertise or interests in other aspects of the company. A good time to do this would be during a performance review period.

3. Analyzing your current HR capacity in light of your goals

HR personnel should analyze the current HR capacity to identify barriers and formulate a plan of action to capitalize on opportunities for improvement and place preventative or defensive measures against potential or recognized problem areas.

HR personnel should work in tandem with senior leadership and develop ways to better equip employees in service of company needs. 

4. Estimating your company's future HR requirements

By combining the analysis and inventory of employees and their skills, you can make forecasts about your HR needs. These should include:

• Demand – What is the estimated number of skilled employees you need in order to achieve your company’s future objectives?
• Supply – How can the number of employees and skills currently available be utilized to achieve objectives
• New roles – Do more jobs need to be created and filled to secure the future of the company?
• Upskilling – What training needs to be provided for current employees to undertake new responsibilities?
• Growth – Are current HR personnel and practices enough to accommodate the growth of the company?

5. Determining the tools required for employees to complete the job

It is important to routinely audit tools such as hardware and software used by employees and identify any issues with them that could be impacting their ability to perform their roles. HR personnel should liaise with appropriate departments in a joint effort to determine if any additional tools, upgrades, or changes are needed to facilitate a more organized and efficient workforce.

6. Implementing the Human Resource management strategy

The insights gained from the analysis and forecasting of your company's HR requirements will be used in the process of workforce expansion and skills development with the goal to prime the company for future growth.  Implementation of your strategic HRM can be achieved as follows:

• Recruitment stage – HR personnel begin the search for candidates to fill skills gaps identified during the HR strategic planning process.
• Selection process – Selection criteria are carefully crafted by HR personnel to assess candidate suitability for the role. This will include effective interview rounds and relevant tests.
• Hiring process – Candidates will be offered jobs after all appropriate checks have been completed.
• Onboarding and training – Design and carry out a comprehensive onboarding and training package to prepare new employees for future success within the role. This is a crucial step as research has shown the quality of the onboarding and training new employees receive can directly impact employee retention.

7. Evaluating and executing corrective action

A timeline to execute a strategic HRM review should be decided amongst HR personnel. This review will monitor the progress made towards key objectives and identify areas for improvement. The review should focus on examining measurable effects from the changes that have been implemented and how they contribute towards achieving company goals. If it is found that the strategic HRM is failing to meet objectives, then corrective action must take place.

SHRM is a complex procedure and involves many moving parts. Fortunately, many processes and strategies involved in strategic human resource management can be automated using Lanteria HR management software solutions. Digitize all components of your strategic HRM for an easy way to keep track of valuable metrics. Our customizable HR platform can help you monitor progress and ensure you stay on course for achieving company objectives.

Plan for future success with Lanteria! For more information on how Lanteria can assist you in the effective implementation of SHRM, contact us today and arrange a free trial!