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What is Strategic Human Resource Management (SHRM)?

11 min read

The definition of SHRM or Strategic Human Resource Management has been debated over the years. 

Why?

Because several commentators have argued that HRM and SHRM are interchangeable; mere synonyms.

To understand the difference, let’s begin with how the term Strategic Human Resource Management came into existence.

Interestingly, the roots of SHRM were found in the 1980s when it was first used, though not popularized.  

In the 2000s, Dave Ulrich said that HR, as a role, had become “often ineffective, incompetent, and costly; in a phrase, value sapping”.

A change was vital. Thus, came in the planning and application of SHRM that urged HRs to become strategic in their functions, thought-process and efforts.  

Strategic HRM is a term used to emphasize the strategic character of a particular approach to talent and organization management that ultimately secures a competitive edge.  

In simpler words, it aims to align the focus of HRM with the focus of the business to boost performance. 

It can be brought down to…

3 major areas of impact

  1. Linking business goals with HRM
  2. Long-term focused
  3. People strategy (better hiring, management & retention) 

Strategic HRM is the overall framework that determines the shape and delivery of the individual strategies, systematically linking people with organizations.

This is achieved by integrating HRM strategies into organizational strategies to deliver organizational success. 

It ensures that various people work together to drive the behavior and climate vital to create value and meet performance targets.

By matching resources to future needs, and with large-scale concerns about structure, quality, culture, values and commitment, strategic HRM is the answer to gain competitive advantage.  

There is no one-size-fits-all strategy.

Organizations need to understand the development, formulation and implementation of thinking, acting and creating strategies unique to their culture, context and objectives.

Strategies can be assessed and evaluated in terms of their efficacy and appropriateness to labour and product market conditions as well. 

Recommended Read:- 35+ Best HR Books to Read in 2022

SHRM is propelled by 4 areas of interest

  • People-management 
  • Purpose-driven organizational culture 
  • HR practices 
  • Connection between HR strategy-Business strategy-HR activities 

Objectives of SHRM

  • To plan HR policies, shape practices and execute programmes that focus on bringing out the best of the workforce for organizational success. 
  • To integrate HR strategies with business strategies for boosting growth.
  • To manage and maintain human capital resources, intelligence, efficiencies, skills, and knowledge of the employees
  • To figure out further means to effectively and efficiently use human resources
  • To provide the right guidance for directing the collaborative efforts of the people and business practices towards accomplishing organizational and the collective workforce goals; and to positively affect how work gets done.
  • To focus on the long-term effects of every HR strategy and policy rather than the short-term benefits.
  • To study the market conditions and identify the needs & customized services of various segments; while also fulfilling them appropriately.
  • To position employees as the primary source of competitive advantage.
  • To enhance resource utilization, increase productivity, improve work culture and optimize remuneration for developing stable employee relations and reducing retention rate.
  • To set strategies for future challenges
  • To offer training and development programs for employees to upskill.
  • To recruit skilled, committed and highly motivated professionals who are the right fit for the organization.
  • To address issues related to organizational structure, effectiveness, culture and resource matching.
  • To enhance the mutual commitment between managers and their employees.
  • To integrate technology with HR practices as an aid in achieving business goals faster.
  • To create an appropriate ‘cost optimization’ policy with an increase in the efficiency of resources.

Importance of Strategic Human Resource Management

Communicating goals and objectives

Communication is key in every relationship. The one between Employees and their Organization is more different.

Any loose ends or miscommunication can have negative implications.

Strategic HRM takes this into consideration and ensures the right message is sent across.

Through the correct translation of the set company objectives, HRs make way for employees to direct all their efforts towards reaching them.  

Getting the right people in the right places

Understanding the talent and where they fit is one of the most vital aspects of SHRM.

A strategic HR realises the value that human capital holds and knows how to onboard the right candidates in the positions they will make the most impact.  

Being future-ready

If the pandemic has taught us anything, then it is to be prepared for any adverse situation in the future.

Basically, to be ready and resilient. SHRM is injected with this essence.

Due to uncertain competitive, industrial, corporate and functional needs, strategic Human Resource management forecasts the future needs of the company.

This way, it eliminates adversity-induced panic, shortage of resources, and reduced productivity that is bound to occur otherwise. 

Improving methods of performance management

Redundant and mundane methods of performance management isn’t going to fill the gaps in productivity.

SHRM is based on this principle as it plunges to enhance the ways employees’ performance is evaluated to ensure maximum productivity.

It also brings employee rewards and recognition into focus along with the identification of under-performers to highlight any requirement of training, upskilling and development.  

Identifying existing loopholes

Success is not accidental. Nor does it magically appear.

Constant reviewing and optimization with several other factors & shareholders is required.

And any old or existing hinderance will cost you your organizational success.

To steer clear of this, SHRM evaluates the current trends and mechanisms within the company and where it lacks.

Ask yourself the following questions to do this- 

  • Where do we struggle the most? 
  • What would we call our number one problem? 
  • Which processes are running smoothly? 
  • Which ones are a constant pain? 
  • What are the manual tasks that we do? 
  • Where does the team spend most of its time & energy? 
  • How much have we lost in revenue due to internal issues? 
  • What are the frequent bottlenecks within the existing HR workflow?  

Enhancing employee experience

Employees are the assets of any organization. And their demands and expectations have changed since the pandemic.

SHRM takes note of this shift and curates employee engagement and satisfaction strategies that boost employee experience.

Retaining your top performers through EX when the talent pool is getting saturated is crucial if you want to enter the next leg of success. 

Reaching organizational goals faster

Rather than thinking for the present times, SHRM focuses on long term goals and plans accordingly.

This way, strategic HRs help companies achieve their goals faster through streamlined actions and high-performing employees.

While several companies fail in even reaching their goals, SHRM ensures objectives are met and productivity remains high.  

Leveraging the power of tech and automation

Relying on manual methods of managing human capital has gone for good as technology has taken over complex problems.

While some HRs assume technology to be replacing them, strategic HRs know the difference digitalization can make and the competitive edge organizations can gain.

Leaving tedious and time-consuming tasks like payroll, performance management and administration to HR software, SHRM concentrates on the bricklayers of the company- its employees.  

Traditional HRM Vs Strategic HRM Comparison

SEGMENT  Human Resource Management (HRM) Strategic Human Resource Management (SHRM)
Motive of actions 
  • Enhancing employee relations, productivity and motivation 
  • Complying with central and state laws 
Collaborative partnerships for mutual benefit with- 

  • External stakeholders (public interest groups, customers and shareholders) 
  • Internal stakeholders (employees) 
Duration into consideration 
  • Short-term 
  • Mostly long-term but also attending to short & medium terms, if necessary 
Accountability 
  • Cost center 
  • Investment center 
HR’s role 
  • Transactional 
  • Reactive  
  • Transformational 
  • Proactive 
  • Change-leader 
Focus of changes 
  • Single motive 
  • Slow 
  • Not connected with larger existing challenges 
  • Flexible 
  • Fast 
  • Integrated with other areas that need attention 
Control 
  • Rules, policies and procedures in place that debar employees from experimenting 
  • Flexibility with organic control, putting as few restrictions on employee behavior as possible to encourage creativity 
Typical job approach  Based on 

  • Tried & tested methods 
  • Management principles 
  • Unquestioned way of the leaders 
  • Resource-based approach 
  • Paves way for cross-training with broader job design  
Responsibility of HR policies & programs  
  • HRs only 
  • Anyone who is managing a team, including line managers, supervisors and all other management authorities 
Areas of interest 
  • Product 
  • Finance 
  • Administration 
  • People & their skills 
  • Technology 

 

Conclusion: 

However, no strategy, no matter how well designed, will work unless your organization has the right people, with the right skills and behaviours, in the right roles, motivated in the right way and supported by the right leaders.

Ensure you are on the right track with all the tools required to leave no room for errors.

Keka supports you in this journey by streamlining the hiring process, providing accurate real-time data, increasing employee engagement and keeping a record of every stage of an employee’s performance chart.

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    Meet the author

    Dr. Nishat Afzal

    Content Writer

    A dentist by profession and writer by choice, Nishat is the Communications Manager and Content Writer at Keka Technologies. A literature lover and a religious fan of Ruskin Bond, her magic works best in creating pieces that involve story-telling, emotional punches, facts & current affairs. If not found sewing letters together to form impactful phrases, Nishat can be seen doing RCTs, crocheting or eating to her heart's content.

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