Strategic human resource management

From CEOpedia | Management online

Strategic Human Resources Management is an attitude to managing people which is based on the concept concerning how the organisation's goals will be achieved through its human resources by means of integrated HR strategies, policies, and practices. It is built upon the fundamental assumption that the human resources of an organization play a strategic role in its success (Armstrong M., 2011, p. 63).

According to the definition presented in Dictionary of Human Resources and Personnel Management the human resources (also called personnel) is the employees which organisation has available and human resources management is the responsibility for an organisation's productive use and constructing dealings with its employees (Ivanovic A., Colin P., 2015).

The concept of Strategic Human Resource Management comes from the 1990s. Business organisations exist in an extremely competitive environment with limited resources. At that time occurs the strategic importance of human resources - the way they are managed, developed, integrated, engaged, retained and utilized to gain corporate competitive advantage. Managing those resources effectively gives the organisation an explicit competitive advantage (Deb T., 2006, p. 46).

Aims of Strategic HRM

The fundamental objective of strategic HRM pictured by Michael Armstrong is to make organizational abilities by ensuring that the organization has the skilled, engaged, committed and well-motivated employees it needs to achieve maintained competitive advantage. SHRM has three main objectives (Armstrong M., 2014, p. 18):

  • first to achieve integration - the vertical alignment of HR strategies with business strategies and the horizontal integration of HR strategies.
  • The second objective is to contribute to the formulation of business strategy by highlighting the attention to ways in which the business can capitalize on the advantages provided by the strengths of its human resources.
  • The third aim is to supply a sense of direction so that the business needs of the organization and the individual and the aggregate needs of its employees can be met by the development and implementation of cohesive and practical HR policies and programs.

Differences between traditional HRM and strategic HRM

Tapomoy Deb distinguish a few issues concerning differences between these two concepts (Deb T., 2006, p. 46):

  • The traditional way focuses on instruments and procedures and also internal requirements, neglect of external trends, while strategic way focuses on business goals and strategies as well as considerate of the internal and external environment.
  • Approach to work in a traditional way is piecemeal: insufficient coordination of Human Resources Management areas and centers on short-term, contrarily is in strategic mode. The attitude is holistic: conceptual integration of HRM areas and for the most part, it centers on long-term.
  • In the first conception, personnel is considered as a cost, in contrast to the second conception where Human Resource is considered as a potential.
  • In the first conception, personnel is recognised as a cost, in contrast to the second conception where Human Resource is considered as a potential.
  • The Human Resource department in the traditional way has low status and has fixed planning derived from production or sales plans, and in the strategic Human Resources department is recognised as a strategic partner and participation in strategic planning is proactive.

Examples of Strategic human resource management

  • Recruitment and selection: Recruitment and selection is one of the most integral components of strategic human resource management. It involves the process of finding and hiring the best-suited candidate for a job. This involves identifying the right people to fill the right job, interviewing them, selecting them, and inducting them. Recruitment and selection strategies should be aligned to the organization’s objectives and should ensure that the most suitable candidate is chosen.
  • Performance Management: Performance management is a key element of strategic HRM and involves setting objectives, assessing performance, and offering feedback to employees. It is an ongoing process that helps to ensure that employees are working towards the organization’s goals and objectives. Performance management strategies should focus on identifying the strengths and weaknesses of employees, rewarding performance, and providing constructive feedback.
  • Training and Development: Training and development is another cornerstone of strategic HRM. It involves providing employees with the knowledge, skills, and abilities to be more effective in their roles. Training and development strategies should focus on developing employees to their fullest potential and helping them to reach their career goals.
  • Compensation and Benefits: Compensation and benefits are an important part of strategic HRM. It involves providing employees with monetary and non-monetary rewards for their work. Compensation and benefits strategies should be aligned to the organization’s goals and objectives and should ensure that employees are compensated fairly and equitably.
  • Employee Relations: Employee relations is a key element of strategic HRM and involves managing the relationships between employers and employees. It includes creating a positive work environment, motivating employees, resolving conflicts, and maintaining a healthy work-life balance. Employee relations strategies should strive to create a positive and supportive work environment and foster a sense of trust and mutual respect.

Advantages of Strategic human resource management

A successful implementation of Strategic Human Resources Management (SHRM) can bring many advantages to the organization. These advantages include:

  • Increased efficiency in managing human resources - Strategic HRM involves creating a set of policies and procedures that are tailored to the specific needs of the organization, allowing for better utilization of employees and their skills. This leads to increased efficiency in the management of human resources.
  • Improved employee engagement - Strategic HRM encourages employees to be involved in the organization's goals, which leads to increased engagement. This improved engagement then leads to increased motivation, productivity, and commitment from employees.
  • Increased organizational effectiveness - By taking a proactive approach to managing human resources, organizations are able to better align their goals and objectives with their strategy. This leads to improved organizational effectiveness, as employees are better able to contribute to the success of the organization.
  • Improved customer satisfaction - Strategic HRM involves creating a set of policies and procedures that are tailored to customer needs, allowing for better customer service. This results in improved customer satisfaction, leading to increased customer loyalty and repeat business.
  • Enhanced organizational flexibility - Strategic HRM allows organizations to be more agile and responsive to changes in the marketplace. This allows organizations to more easily adapt to new market trends and take advantage of new opportunities.

Limitations of Strategic human resource management

The limitations of Strategic Human Resource Management include:

  • The cost of implementing and maintaining HR strategies can be prohibitive for smaller organizations, making it an unattainable goal.
  • There is the potential for a lack of buy-in from staff if they are not consulted regarding the strategies, resulting in a lack of engagement.
  • Additionally, there is the potential for conflicts to arise between short-term and long-term goals, with short-term goals not always aligning with long-term strategies.
  • The lack of a consistent approach to HR strategies can be a hindrance to achieving success, as each strategy needs to complement each other in order to be effective.
  • The complexity of HR strategy can also be an issue, as it may be difficult to implement and evaluate.
  • Finally, HR strategies can become outdated quickly in a rapidly changing business environment, meaning regular review and updating is necessary in order to remain effective.

Other approaches related to Strategic human resource management

The following approaches related to Strategic Human Resources Management are:

  • Performance Management: Performance management is a systematic process that evaluates employee performance in relation to organizational goals and objectives. It is a continuous cycle of planning, monitoring, and assessing employee performance against pre-established standards.
  • Workforce Planning: Workforce planning is a systematic process of analyzing current and projected workforce needs and developing strategies to meet those needs. It involves analyzing current and future staffing needs, developing strategies to meet those needs, and ensuring that the organization has the right people in the right place at the right time.
  • Talent Management: Talent management is the systematic process of identifying, developing, and deploying top talent to achieve organizational objectives. It involves developing strategies to identify, recruit, and retain top talent, as well as developing and implementing processes to ensure that the organization is able to attract and retain the best talent.
  • Learning and Development: Learning and development is the process of helping employees gain the knowledge, skills, and abilities they need to be successful in their roles. It involves developing and implementing training and development programs, as well as creating and maintaining a culture of learning and development.
  • Organizational Development: Organizational development is a systematic process of changing and improving the organization's structure, systems, processes, and culture to increase effectiveness. It involves analyzing the organization's current state and developing strategies to improve it.

In summary, Strategic Human Resources Management is an attitude to managing people which is based on the concept concerning how the organisations goals will be achieved through its human resources by means of integrated HR strategies, policies, and practices. Other approaches related to Strategic Human Resources Management include Performance Management, Workforce Planning, Talent Management, Learning and Development, and Organizational Development.


Strategic human resource management — recommended articles
Organizational development — Personnel strategy — Strategic human resource — Chief innovation officer — Management by objectives — Talent management framework — Management by culture — Management by objectives steps — Learning organization

References

Author: Natalia Supernak

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