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In Human Resource (HR) and management circles nowadays there is much talk about Strategic Human Resource Management and many expensive books can be seen on the shelves of bookshops. But what exactly is SHRM (Strategic Human Resource Development), what are its key features and how does it differ from traditional human resource management?

SHRM or Strategic human resource management is a branch of Human resource management or HRM. It is a fairly new field, which has emerged out of the parent discipline of human resource management. Much of the early or so called traditional HRM literature treated the notion of strategy superficially, rather as a purely operational matter, the results of which cascade down throughout the organisation. There was a kind of unsaid division of territory between people-centred values of HR and harder business values where corporate strategies really belonged. HR practitioners felt uncomfortable in the war cabinet like atmosphere where corporate strategies were formulated.

Definition of SHRM

Strategic human resource management can be defined as the linking of human resources with strategic goals and objectives in order to improve business performance and develop organizational culture that foster innovation, flexibility and competitive advantage. In an organisation SHRM means accepting and involving the HR function as a strategic partner in the formulation and implementation of the company’s strategies through HR activities such as recruiting, selecting, training and rewarding personnel.

How SHRM differs from HRM

In the last two decades there has been an increasing awareness that HR functions were like an island unto itself with softer people-centred values far away from the hard world of real business. In order to justify its own existence HR functions had to be seen as more intimately connected with the strategy and day to day running of the business side of the enterprise. Many writers in the late 1980s, started clamoring for a more strategic approach to the management of people than the standard practices of traditional management of people or industrial relations models. Strategic human resource management focuses on human resource programs with long-term objectives. Instead of focusing on internal human resource issues, the focus is on addressing and solving problems that effect people management programs in the long run and often globally. Therefore the primary goal of strategic human resources is to increase employee productivity by focusing on business obstacles that occur outside of human resources. The primary actions of a strategic human resource manager are to identify key HR areas where strategies can be implemented in the long run to improve the overall employee motivation and productivity. Communication between HR and top management of the company is vital as without active participation no cooperation is possible.

The relationship between human resource practices and a company’s business strategy are aligned in many ways. The ultimate goal of the alignment is to use human capital as instrument to maximize the organization assets for the benefit of the stakeholders. Below are some of the relationship between human resource practices and business strategy.

STRATEGIC HUMAN RESOURCE MANAGEMENT

Human resource practices create the process for the development of employees’ knowledge and the skill-set across the organization to promote its core competencies that support and maintain its competitive advantage in the industry. The term “strategic HRM” is the new template in the management of modern organization that is anchored on the concept that the most valuable asset an organization provides itself is HR, since it is the tool that is responsible for the coordination and implementation of other factors of production that spurs corporate performance journals

The business strategy adopts by an organization is meant to showcase how it intend to succeed by using the factors of production at its disposal to build a competitive advantage, strategy-business. Business strategy helps to identify the direction that the organization wishes to go in relation to its environment. Human resource strategies manage human resource so that the goals set by the organization can be achieved. The focus is directed on what the business intentions are as they relate to human resource policies and practices. Therefore, how human resource is spread across the organization’s units and departments, motivated, managed and retained will affect the performance outcome after the business strategy has been implemented. The relationship between business strategy and human resource practices also would determine the organization competitive and performance outcome.

A glimpse into Oya Erdil & Ayse Gunsel’s ‘BUSINESS STRATEGY AND HUMAN RESOURCE STRATEGY- THE INTERACTION’ shows there is a relationship between human resource management practices and an organization business strategy, which also could be referred to as the business environment and organizational development. Another defining aspect of that relationship is the across the board acceptance that an organization’s human resource management practices have a link to the firm’s decision making process, in other words, the HR practices be closely aligned with the strategy of the whole business. While there is not much disagreement as pertaining to the relationship between HR practices and business strategy, there is a tendency not to acknowledge the deeper nature of the relationship. The theory of human resource management opined that should employees be considered and managed as a valued strategic asset, the organization in practice would be able to achieve a competitive advantage, and the outcome will be a superior performance. This again, means managing human resource in such a way that it will correspond to the business strategy, being that the goals and process of each of the strategy profiles are different.

According to Oya Erdil & Ayse Gunsel, this relationship is further entrenched when you look at how human resource practices are selected based on competitive strategy espoused by the organization. An organization that coordinates its business strategy and human resources policies and practices achieve a superior performance outcome than those that do not.

ALIGNING PERFORMANCE MANAGEMENT TO STRATEGY AND CULTURE

As explained by Rob Gray’s ‘Aligning performance management with business strategy,’ some employers could be missing the key factor that links performance management to strategy and culture. For it is an organization’s prevailing culture and practices that will determine the optimum use of its valuable asset (human beings) when its business strategy is aligned with its human resource practices. The right tools are needed if employers are to succeed in aligning their human resource management to its business strategy. The era of using performance review and appraisal as the only tools for performance, management solutions have since been replicated by a complete suite of competency measurement tools. These tools are able to assist employees to understand the means and learning resources through which they can effectively develop their skills and talent. Technology is one of the enablers but needs commitment from top down that is important for a high performance culture.

TALENT MANAGEMENT

Edward E. Lawler lll’s, ‘What should HR Leaders Focus On In 2014’ gives a deep insight into how business entities could achieve a superior outcome for their shareholders. While technology is a valued enabler that spurs performance leading to superior outcome for an organization, another thing that should be a thing of focus for HR is the aspect of talent management that assesses the necessary skills every organization needs to implement its business strategy, the plan for recruitment and the management of critical talent. Even though, talent has long been determined to be important, it is of recent becoming more so given that many businesses are performing knowledge based work that is more complex, and with operations in the global markets. This has led to the situation of performance talent having a great impact on the organization’s bottom line. Google, Amazon, Apple, and other techs and service organizations have done a tremendous job of recruiting and managing people around the world that have the needed critical knowledge based skills. Their talented workforce have been able to perform well, differentiate their companies from competitors across industries which have translated to a pattern of communication that relays their type of employees and the jobs they offer.

INNOVATION

Innovation is another standard of performance management, Innovation.Tools.com, that when effectively coordinated with an organization business objectives lead to a superior performance outcome. When an organization devote a substantial amount of time to innovation and business strategy, and both are valued equally, promoted across the board, and well communicated, a culture would exist naturally which will foster a relationship of the two. The fostered culture creates a top down business objectives that are communicated across the board in the organization, that enable all units to focus in addressing the organization’s short and long-term goals. From then, it becomes the innovators’ task to forge an alignment of their activities in support of the organization’s goals. The various ways to naturally coordinate both camps is the joint development of technology/product, and business road maps that encourage discussion and debate, forging links that guides actions. Successful performance outcome are highlighted through internal business and fairs, using the avenue to raise visibility for long term opportunities.

While do-it-yourselfers are reportedly shaking up the real estate industry by jumping into the market to sell their own homes, a do-it-yourself human resource strategy is rarely as successful. That’s because human resource management doesn’t just represent one aspect of managing people; it is a broad and complicated function. It typically includes eight functional areas including recruitment and selection, employee and labour relations, performance management, training and development, career management and succession planning, organizational development, compensation and benefits, and administration and records management.

You need to have expertise in each of these areas to ensure your organization is running smoothly from the people side of the business. Therefore, today’s business and the complexity of the people issues experienced by organizations no longer support the old “add-on” strategy of tacking HR as a responsibility to a front-line operational manager. There are just too many risks.

For instance, high turnover is one risk that can cost an organization up to three times the salary for a frontline worker and much more for highly skilled professionals. Low morale is another costly risk as poor performance management, a failure to deal with internal employee conflict, low support for training and development and/or the lack of advancement opportunities can cause havoc with employee productivity.

Finally, let’s face it, employees are more quickly reaching out beyond their employer for help or restitution. If their employer fails to address a work situation, employees will turn to their human rights commissions to seek justice for issues such as failure to accommodate for disability, sexual harassment and other employment-related issues. And from a business point of view, it doesn’t matter whether a situation is a win or a loss, the cost of legal fees, possible awards for damages as well as the overall public scrutiny that will surely result can be quite scary.

It doesn’t matter whether your organization is big or small or whether you operate as a business or a not-for-profit, human resource management matters. In fact, human resources starts and ends with your business. So, let’s look at what a human resource role in your organization can do and why you should invest in this function.

Ask yourself the following brief questions and learn how a human resource professional can help make your business successful.

Meeting customer needs – What organizational skills and capabilities are needed to ensure your products or services not only reach your customer on time, but meet their specific needs. Will new employee skills be needed as your products/services change to meet market demand? A human resource professional can help by conducting needs assessments, sourcing training and/or developing programs inhouse.

Responding to market trends – What are the trends for your industry? Are you downsizing? What plans are you making for this strategy? Who do you need to keep, how will you decide? Or, are you in growth mode? How many staff do you need and where can you find them? A human resource professional can put the strategy and systems in place to handle both of these organizational situations.

Annual productivity goals – Can you meet your productivity goals with the staff you have? Are there pockets of discontent that need examination? Are you experiencing turnover and losing key staff? A human resource professional can conduct an organization review, determine whether your structure is effective and/or whether job roles need to be changed or expanded.

Confronting change – The world is speeding along at so fast a rate that managing change is now a daily issue. What changes are you being confronted with? What will the impact be on your employees? How will you manage the transition? A human resource professional can act as your change champion, planning for all the stages of change and managing the process.

Meeting market compensation value – What compensation do you pay compared to your competitors? What is your pay philosophy and how is this implemented throughout your organization? When was the last time that you examined internal pay equity? Are your employees experiencing a positive “fair felt pay”? A human resource professional can review your compensation practices and ensure that compensation becomes an employee retention strategy.

These business elements are only a fraction of how a human resource professional can contribute to your organization. But how do you know you are ready? Ask yourself, “Where exactly are you spending your time?” It is my experience that if you are spending more than 20 per cent of your daily schedule dealing with human resource management issues, then it’s time you created a role for a human resource professional in your organization or contracted with an outside professional for help. Don’t wait until you are experiencing a great deal of pain, because by then the damage is done.

What does a human resource management professional look like today? What are their qualifications and credentials? The human resource profession has grown by leaps and bounds over the last 15 years. While earlier in the history of the profession, most people entered from the operational side of the business, today, people are specifically choosing the profession and receive specialized training. Most young people graduate with a business degree while others come with an alternate undergraduate degree and an MBA or master of leadership or organization development. Today as well, there are numerous professional designations such as the Certified Human Resource Professional (CHRP), Senior Professional (SPHR) and the new Global Professional (GPHR).