Definition: Strategic human resource management (SHRM) is a managerial tool used to reform the company’s human capital such that it is in synchronization with the organizational goals and vision. It is a far-sighted approach where the strategic decision-makers analyze the company’s manpower potential and balance it with the future requirement.
Globalization has extended the corporate operations to such an extent that human resource management has become highly challenging for organizations.
In the digital era where awareness is at its peak and the employees work for recognition and status, their retention and management are strenuous tasks.
SHRM is the key to handle all such complex issues and become resourceful in today’s vying business environment.
Content: Entrepreneurial Management
Components of SHRM
What does strategic human resource management comprise of?
Given below are the four fundamentals termed essential for accomplishing strategic human resource management:
- Human Resources: SHRM focuses on treasuring the human capital as essential for an organization’s success.
- Activities: The SHRM activities encompass all that the employees need to inculcate i.e., human resource philosophy, practices, policies, programs and processes.
- Purposeful: The strategic human resource management is adopted with the mindset of realising a certain corporate goal.
- Pattern and Plan: It is a means to align the personnel strategy with the company’s overall business strategy.
Some of the prevalent features of strategic human resource management are discussed below:
- Proactive Approach: Strategic human resource management is a perceptive phenomenon which focuses on human resource planning to handle any forthcoming situation.
- Managerial Tool: It is one of the essential managerial tools which especially enables the organization to competently utilize its human capital.
- Explores Human Potential: Human capital is a priority in SHRM and therefore, it unfolds and polishes the hidden abilities of the employees.
- Aligns with Corporate Strategies: SHRM is a consistent effort made in collaboration with the overall corporate strategy for accomplishing the organizational purpose.
- Problem-Solving: Strategic human resource management is a planned approach to direct personnel towards resolving a major organizational issue.
- Involves Decision-Making: It not only analyzes the possible solutions but also decides which one to choose while targeting a particular problem.
- Comprehensive Solution: SHRM is a clear cut solution to all the issues related to the company’s manpower.
Tata Power Limited, a business concern of the Tata Group have always prioritized its people above anything else.
The company has promoted a culture of commitment, co-creation and lively environment in their workplace.
Some of the known HR strategies following in the organization are:
- Identifying human resource personnel as strategic business partners;
- Reviewing of the Managing Director’s leadership behaviour;
- Infusing young talents in the company;
- Running an organizational transformation movement – Leher; and
- Carrying out a Learn Apply Share Enjoy and Reflect (LASER) program.
Types of HRM Strategies
A strategy as we know is a perceptive plan of action rather than a regular process. Following are the multiple kinds of HRM strategies:
Overarching Strategies: These strategies are determined towards overall development and handling of the organization’s human resource. It includes employees’ recruitment, compensation, training, retention, promotion, engagement, etc.
Specific Strategies: The specific strategies focus on dealing with a particular area of concern in terms of human resource. Say the concern is about manpower training and development.
Recruitment Strategies: In case the organization lacks competent manpower, the recruitment of skilled and experienced personnel is carried out.
Restructuring Strategies: This is an approach to overhaul the complete human resource structure which includes hiring or layoff, job redesigning, regrouping, etc.
Collaboration Strategies: The company shake hands with the other organizations to get their promising workforce trained to inculcate new skills.
Outsourcing Strategies: Sometimes, the company finds out that handling certain operations to an external firm or individuals would save its cost, time and efforts, it goes for outsourcing strategy.
Training and Development Strategies: It focuses on the imparting skills and knowledge to the employees who have the potential to learn and acquire a higher position in the organization.
Objectives of Strategic Human Resource Management
Strategic human resource management concentrates on transforming the whole picture of the company’s human capital to reveal its highest level of efficiency.
Following are the intentions behind SHRM:
Effective Human Resource Utilization: SHRM prioritizes company’s human resource demand and accordingly plans acquisition and training process of new and current employees.
Goal Accomplishment: The reason behind executing strategic human resource management is to meet the corporate objective and goals competently.
Follow-up of HRM Practices: SHRM tracks the impact and application of human resource practices, to improvise the manpower operations and results.
Formulation of HRM Policies: It establishes the human resource principles or actions in alignment with the organizational policies.
Better Inter-department Relationships: With a proficient workforce, high team spirit and coordination, the organization’s inter-department relations strengthen.
Strengthen Compensation System: On one hand, it ensures that each employee is fairly paid. Simultaneously, SHRM endeavours progressive compensation policies to encourage the workforce to improve their performance standard.
Succession Planning: SHRM is the key to provide growth opportunities to promising and result-oriented employees by scheduling their training sessions accordingly.
Guidelines Establishment: To facilitate effective supervision and strategic implementation, the HR managers are armed with essential guidelines.
Performance Standard Evaluation: Reviewing the strategic transformation and its impact, helps the management to inspect whether the performance benchmarks are met.
Deal with Future Challenges: SHRM is a visionary approach and therefore, it is carried out with the view of being pre-equipped for an upcoming situation.
Employee Engagement: The strategic HR management also emphasizes on motivating the workforce through competitive benefits and performance appraisals to keep them engrossed at their duties.
Executive Leadership: SHRM is a sure-shot way for HR professionals to enter the boardroom or the strategic decision-makers group rather than being limited to administrative functions.
Workforce Mobility: It initiates cross-training or job rotation for adding to the knowledge and abilities of the employees. It is a strategy to utilize existing resource for immediately filling the vacant position in case of employee turnover, without interrupting the business functioning.
Strategic Human Resource Management Process
How to go about while practising strategic human resource management?
The following consecutive steps would serve as a guide while proceeding with SHRM:
- The foremost step on which the whole strategy is dependent upon the framing of the company’s aim (in the short and long term), mission and vision.
- The next move is to find out the potential of the available manpower and to ascertain the skills and competencies of each personnel, i.e., job analysis.
- At this point, a reality check is done to know the deficit in the human resource when compared to the actual personnel requirement for goal accomplishment.
- If there is a lack of skilled human resource as per the company’s strategic demand, this skill gap is measured.
- The manpower cannot function barehanded, therefore SHRM ensures whether the employees have relevant tools and skills to use this mechanism.
- The next step is to recruit, select, hire, onboard and train the new entrants to successfully enforce the human resource management strategy.
- Lastly, a proper human resource inspection is to be carried to maintain efficiency. In case of any loophole, the management needs to implement curative measures.
Importance of Strategic Human Resource Management
SHRM is not a quick fix, instead, it is a thoughtful and visionary move towards a bigger picture.
Let us explore its significant benefits to the organization:
Develops Team Spirit: The strategic human resource management is an effort to make sure that the employees work unanimously on the path of goal attainment.
Improves Efficiency: With the betterment of human resource policies, plans, processes and practices, the overall corporate efficiency shoots up.
Enhances Productivity: SHRM deploys employee disengagement which ultimately contributes to a happy and highly productive workforce.
Strengthens Brand Image: When the employees feel contented, the production is high and consumer satisfaction is pitched; the company’s reputation augments.
Brings Business Sustainability: SHRM backs the organization with succession planning, just to make sure that the business goes on even when one or more employees quit the job abruptly.
Fulfils Manpower Requirement: It fills up the organization’s vacant personnel positions at all the levels while ensuring the best possible utilization of the human capital.
Generates a Feeling of Belongingness: The employees feel valued and gets a fair chance of success in the organization. Hence, they develop a sense of responsibility towards the organization.
Creates Dynamic Workforce: Strategic human resource management continuously emphasizes on the development of the employees. Thus, it enriches the manpower competencies and knowledge to perform different roles in the organization.
Bringing a complete change in the human resource system of the company is not a cakewalk.
Some of the major obstacles which the strategic decision-makers encounter are as follows:
- Labour Union Restrictions: Changes are not openly welcomed by everyone, thus the management may face rebel or hesitation from the labourers and their union.
- Inflexible HR Policies and Practices: Sometimes, the organization comprises of quite rigid human resource system which is difficult to be modified.
- Improper Strategic Reasoning: The management at times fail to justify their human resource strategy, resulting in a poor SHRM practice.
- Impact of Unpredictable Factors: Even the most effective human resource strategy would be in vain if the external conditions (social, economic, political or market) become unfavourable.
- Trial Error Method: The management always perceives the application of a certain strategy would fix a problem, it may or may not work.
- Prone to Failure: The strategic decision-makers are usually conscious about their steps in reforming the organization’s human resource system.
- Lack of Managerial Support: Leadership conflicts and inter-departmental distress results in meagre cooperation among the managers while carrying out SHRM.
Strategic human resource management is a team-oriented approach. Therefore, for the best results, equal efforts are to be made by each employee of the firm irrespective of their level or position in the organization.