Last updated on February 19th, 2024 at 09:07 am
Strategic Human Resource Management (SHRM) is a process that links human resources with the core objectives, goals, strategies and goals of an organisation. The main differentiator between traditional human resources and strategic human resources is that the former focuses on day to day management of the employees and the latter gives importance to how the employees can achieve the company's objectives.
HR managers have to understand the concept of SHRM in-depth to formulate company policies. A certificate course in HR management can advance your career prospects if you are already employed in the HR department.
Importance of Strategic Management of Human Resources
Building a balanced and dynamic workplace
At the heart of cultural awakening, the role of human resources has become as strategic as ever. The power of the strategic HR planning process can be leveraged to foster positivity in the workforce. Satisfied and happy employees are more committed to their work. A dynamic workforce will be ready to embrace digital transformation and in some instances, be inspired to lead the change themselves. Maintaining a balance in the workspace and eliminating the tussle will have a positive impact on staff retention figures.
Deciding the right people for the job
SHRM helps companies utilise their resources wisely ensuring that every employee realises their full potential. Encourage your employees to openly discuss their grievances. A healthy relationship between management in the human resource and the workforce can boost productivity. Strategic HRM is more about being proactive in assessing organisational goals and taking early steps to hire the right people in the workforce. Strategic HR should try to fulfil the needs of people in the workforce in general for the organisation to fulfil its goals.
SHRM connects human resources with company objectives
Strategic Human Resources deals with expanding business, adapting organisational culture and developing a competitive edge over other corporations. Growing a business has become ever more competitive in light of emerging trends like digital disruption and bringing about social change. This is where Strategic Human Resource Management comes into the picture. An organisation’s goals can change depending on external factors like demand supply, and competition. The strategies should align with changing workplace scenarios.
Employee engagement
SHRM directs the employees in the right direction. It has concrete plans to reward them at the right time. Promoting transparent communication, helps the employees understand organisational needs and act in accordance. Effective employee engagement can elevate low engagement with clever initiatives. Enforcing SHRM strategies can give organisations a significant competitive edge over similar corporations.
Future human needs
According to the corporate, competitive, functional requirement of an organisation, SHRM predicts the need for future human resources such as time-off management software. A time off management software measures the performance of the employees. They are rewarded with perks according to the output generated. This Strategic Human Resources Management reduces the chance of future lack of future human supply. It helps in streamlining the consistency of the operations. If there are training requirements, HR management executes them. Training and development are essential for managing the workforce. Your employees' skills may be redundant if they are not in pace with rapid changes in technologies.
Steps to Strategic Human Resources
Identify the company’s goals and objectives
When you understand the company’s goals and objectives it’s easier to chalk out programs and policies that support these goals. HR needs to recognise the long-term and short-term goals of the company before backing it with a strong strategy. A goal is a purpose that can be achieved in a specific timeframe. It’s essential to conduct a thorough SWOT analysis before defining your strategic HRM goals.
Design strategies
Strategic Human Resources is all about assessing emerging trends and implementing best practices. However, these practices and policies should be driven by data. It empowers HR professionals to make evidence-based decisions that are driven by productivity. Before you start creating a strategy, you need a keen understanding of strategic business. Leverage networks, business acumen and leadership. Consider enrolling for an HR management course.
Develop tactics
Design tactics that will help you to implement the strategies. While developing them, give a thought about the expected results and resources to be allocated. Two kinds of tactics can be put in place. They are - i) Direct Tactics and ii) Indirect Tactics.
- Direct Tactics - Direct tactics involve implementing the strategies immediately. Examples include staffing, promoting and giving raises to people, employee retention strategies etc.
- Indirect Tactics - These involve utilising other resources to back your strategies. Examples include training and advertising, outsourcing etc.
Evaluate organisational readiness
By combining business and HR metrics, you will be able to evaluate whether the corporation has the resources to implement different kinds of strategies. Provide strategic insights and comply with administrational laws and regulations in tandem. If they are out of control, the analytics and assessments will be mismanaged and become a stumbling block. Introduce innovations to basic administration while giving strategic input to culminate into your full potential. The size and history of your company doesn’t matter.
Monitor the performance
Monitoring the performance includes measuring it against predetermined benchmarks. By integrating certain measures into business metrics, you will have an astute understanding of people as well as seniors and subordinates who are driving the business decisions. Here are 5 key metrics to be assessed by every HR professional.
- Employee Turnover Rate - This rate is calculated with the help of dividing the number of employees who have left the organisation against the total number of employees over a certain period. This includes the employees who exited as well as fired or laid off.
- Time-to-hire - The time lapse between a candidate applying for a job and the same candidate accepting the offer letter.
- Benefits Participation Rate - The rate at which the employees are participating in a particular benefit program.
- Diversity - Companies and corporations should strive for an inclusive and conducive work atmosphere where the employees feel safe and their needs and reasonable demands are answered.
- Employee Satisfaction - Assess employee satisfaction every year i.e. how satisfied they are with their work and the corporation they are working for.
Determination of tools required to finish the job
After the analysis of the company's HR requirements, it’s time to commence the process of extending the capacity of your workforce and facilitating the task of readying your company for future growth. You can implement the human resource strategy by performing the following tasks:
- Start with the recruitment process - The human resource department scouts for candidates who have the necessary skills identified during the planning process.
- Organise a selection process - Appropriate candidates are hired by means of performance in the interviews and according to other selection criteria decided by the core management of the organisations.
- Begin the onboarding process - Make an offer to the candidates who have ticked all parameters in the selection criteria.
- Design the training modules - A comprehensive training module must be designed to increase employee retention rate. Once the onboarding process begins, you have to keep them engaged.
Assess the SHRM strategy
As in the case of any other plan, things may not turn out as expected. Make necessary preparations to ensure that you are still on track to achieve the necessary goals. For instance, if you are not achieving the required results, you may need to modify your strategy or if you are finding that your training programs aren’t effective, you need to incorporate those changes as well.
Programs and Policies of SHRM
Performance Management
Performance Management is the process of exchanging continuous feedback between the managers and the employees to ensure that the goals and objectives of an organisation are achieved. The definition has since then evolved since its appearance as a concept. What was once an annual process is slowly transforming into continuous performance management. The motive is to ensure that employees are efficiently performing their duties throughout the year and in the process, address any issue that arises.
Training and Development
Training and Development commences by assessing the requirements of the employees. This interpretation should consider the long-term goals of the corporations and their outcomes for the employees. The misinterpretation between goals and expectations indicates that there is a need for training. The next step is to clearly define the training objective which becomes the basis for directing training and development programs. Further, the design of the training program will vary according to the type of trainer, the skill base of the employees and the training method to be used. The designed plan is put into action and it's necessary to create a conducive environment for learning. A participative approach should be employed by the people in the workforce.
Compensation and Benefits
Design a comprehensive compensation and benefits policy that will help in the retention of employees. Compensation and benefits refer to salary, perks and incentives offered to people in the workforce. Compensation management designs, administers and evaluates compensation programs to make sure they are effectively implemented. Many factors have to be taken into consideration. Evaluating a compensation program can be achieved through surveys, data analysis and focus groups. There are two different kinds of compensation in HRM:
- Direct Compensation - The financial gain earned by employees for their time and labour is called Direct Compensation. It is credited to them directly in the form of wages or monthly salary. Direct Compensation is by the terms and conditions between the employer and employee.
- Indirect Compensation - The finances earned by employees in addition to the regular salary or wages. An employee might receive compensation for exceeding their weekly targets. Indirect Compensation gives a sense of belonging to the employee and holds them off from quitting the company.
Employee Relations
Employee relations or ER refers to the relationship between employer and employee. It’s the responsibility of HR to work towards developing and managing employee relations and resolving issues between both parties to maintain a healthy relationship. Depending on the requirements and sise of the company, they also might appoint an employee relations manager to mitigate conflicts and misunderstandings between the employer and the employee. The duties of an ER manager may include formulating policies to ensure fair compensation, suitable working hours to maintain a work-life balance and a proper leave structure for the benefit of the employees.
The 5 P's Model of SHRM
The 5 P’s model is outlined in 5 aspects namely Purpose, Principles, People, Process, and Performance.
- Purpose - The intention of the organisation defines the purpose. This includes a particular corporation’s vision, mission, objectives, strategies and goals.
- Principles - Principles are the attitudes or assumptions on how an organisation should function and conduct its operations. This variable includes integrity base, ethics, values and code of conduct the employees should adhere to when they are employed by a particular organisation.
- Processes - These are the organisational structures and procedures that are used to manufacture the products or execute the services provided by the company including the rules and regulations that govern these systems.
- People - People are entities that coexist with an organisation that works in accordance with the Principles and Processes aligning with their main purpose.
- Performance - Performance comprises all parameters and results that indicate the standing of the organisation and are used as a benchmark for decision-making.
For an organisation to streamline its functioning, theories indicate that all five variables must be aligned. Incompatibility among the five variables leads to wastage of resources.
Objectives of Strategic Management of Human Resources
Technology based Training
No matter how great the technology is, the desired outcome can only be generated when the employees are ready for a change in technology trends. Due to this process, electronic sludge will be accumulated. Training on new technologies is a continuous process that requires feedback and support. You can provide support in various ways, such as designing an online forum where employees can communicate with trainers and experts to address their grievances. Another way to equip employees with new technology is to persuade them to collaborate with each other.
Human Resource Planning
Human Resource Planning (HRP) is a strategy employed by companies for maintaining steady turnovers of skilled employees while avoiding employee shortages. It’s of the utmost importance to have a good HRP in place. Human Resource Planning should be very flexible and should be able to address short-term challenges related to staffing while adapting to dynamic conditions over the long term. To retain employees and foster healthy competition, Human Resource Planning often considers succession planning and increased overall return on investment.
High-Performance Management
High-Performance Management involves the implementation of HR practices that are internally consistent and aligned with the strategic and systematic approach of an organisation. It is an ongoing process rather than a process that is performed annually. It involves producing a conducive environment that fosters development and continuous improvement. High-Performance Management is indispensable in driving organisational success. Rules, guidelines, collaboration, and management are all constituents of a high-performing workplace.
High Involvement Management
High Involvement Management is correlated to productivity and better economic performance of corporations. Practices such as training and incentive pay schemes have a track record of boosting a company’s productivity and financial performance. These can boost employee morale and have a positive impact on their well-being by providing discretion and autonomy.
Benefits of Strategic Human Resource Management
Strategic HRM doesn’t depend on HR strategy. Thoughtful organisations align both in a long yet fulfilling process. SHRM combines the internal policies of HR with those of prerequisites and needs of business.
One of the noticeable benefits of SHRM is the optimisation of procedures and streamlining of the working of systems. Employees receive the right amount of motivation as a result of increased focus which leads to spiked productivity levels. They foster a sense of loyalty and add more value to the company. It enforces improvements in multiple areas such as training recruitment, and performance management by designing strategies that align with a company’s objectives.
SHRM simplifies the HR process which makes the system more agile and efficient. It increases the satisfaction levels of the managers with the employees. By combining the internal priorities of human resources with the requirements and needs of human resources, SHRM takes into account the ability of employees to accept change.
The more satisfied the employees are, the higher the employee retention rate. Companies save resources by retaining employees who add value to the company. SHRM refines the duties of human resources while retaining its core competencies. A corporation that wants to cultivate good relationships with its employees must implement SHRM.
Conclusion
Strategic human resources management helps companies realise their goals by better managing their manpower. Developing a strategic human resource strategy can be cumbersome but the pros outweigh the cons. A skilful SHRM plan can help your company achieve its goals and employ the right people for the job. Study human resources online with a certificate course in Human Resource management If you want to advance your career prospects in the HR domain, check out the Human Resource Management and Analytics CEC course by Imarticus. This course has been designed in collaboration with IIT Roorkee.
