What is Strategic Human Resource Management? Types, Functions, Examples

Do you know what is strategic human resource management? Unlock the power of Strategic Human Resource Management (SHRM) with our comprehensive blog. Dive into the types and functions of SHRM, backed by real-world examples. Discover how SHRM enables organizations to strategically optimize their workforce and gain a competitive edge in the ever-evolving business environment. Discover the ins and outs of Strategic HRM with the help of Professional Certificate Program in HRM & Analytics from IIMK.

What is Strategic HRM?

How to define Strategic human resource management? It is an approach to the practice of human resources that addresses business growth and challenges and makes a direct contribution to long-term objectives. The main goal of strategic human resource management is to boost organizational effectiveness, sustain an innovative culture, and relentlessly pursue competitive advantage. It has a greater impact throughout the entire business and is a step up from standard human resources.

What are the Characteristics of SHRM?

The following are the characteristics of SHRM:

• Attempts to match human resource policies with requirements for intellectual excellence.
• An organizational framework connects several HR efforts so that they can support one another.
• Efforts to link human resource operations with business profits and excesses.
• The management of human resources has been delegated to staff members with lesser levels of authority.
• The company’s overall strategic goals, the ethical culture, and the HR rules and procedures are all expressly related.

Scope of Strategic Human Resource Management

The following are the scopes of Strategic Human Resource Management:

• HRM in Manpower Planning: This is generally direct personnel management, which includes planning for the use of employees, recruiting, literacy and advancement inauguration and alignment, relocation, elevation, remuneration, layoffs and reductions, and job performance. 
• Workforce Welfare and HRM: This particular HRM area focuses on workplace amenities and operational circumstances. It includes a variety of responsibilities and services, such as insurance, healthcare, the economy, welfare benefits, and hospital support.
• Work Relations and HRM: Since it is such a sensitive subject, it necessitates adequate communication with labor or staff groups, settling their grievances, as well as effectively resolving disagreements.

Objectives of Strategic Human Resource Management

The following are the objectives of Strategic HR Management:

• Resource-based Strategy: Resource-based theory can be delicate to understand because the word” assets” is employed throughout common English in colorful ways. This is very critical to separate strategic resources from all other types of resources. For illustration, cash is a precious asset for the utmost people. 
• Achieving Strategic Fit: Employee retention and motivation are aided by a strategic alignment of corporate strategy and human resource management plan.
• High Involvement Management: It includes Selective hiring, Decision Power, Extensive Training, Information Sharing and Incentive Compensation.
• High-Performance Management: By developing mechanisms to monitor and enhance performance, SHRM can assist firms in increasing employee productivity.
• Manpower planning: Manpower planning, frequently known as human resource planning, entails placing the correct amount and type of labor force in the applicable locales at the appropriate times to carry out tasks for which they are good. 
• Train the employees on technology: Employee usage is required for any new employee-facing technology to enable participation and industry learning and it is important to train employees with an eLearning system or another.  
• Employee motivation: The HR team’s main goal is to keep things going in the correct direction. Keep negative energy and distractions at a distance.

Importance of Strategic Human Resource Management

Let’s discuss the importance of Strategic Human Resource Management:

• Increased job satisfaction: When executing your job or being in the office, an unmeasurable statistic called as employee satisfaction is defined as a pleasurable visceral outpouring.
• Better work culture: SHRM can help businesses create a positive work culture by managing employee relations. 
• Forecasting Future Human Needs: Organizations should set some future strategies to survive in the competition. 
• Improved customer satisfaction rates: Employees may evaluate the vast array of services the organization offers with HR consultants that work in recruiting and training.
• Efficient resource management: A top-performing HR division could help the business achieve that goal. Efficiency is streamlining everyday tasks while still producing the best outcomes possible, even when you would want to concentrate more on challenging issues.
• A proactive approach to managing employees: Proactive HR investigates the business and its goals to identify potential problems and creates procedures to stop and resolve issues before they become major ones.
• Productivity boost: Businesses may increase productivity by enhancing employee performance and fostering a good work environment with the aid of SHRM.
• Selecting and Utilizing Motivational Tools: Promotion in the workplace, which is an example of the incentive system, is one of the most often used methods for increasing motivation.
• Setting efficient people to achieve specific goals: Every process for increasing productivity begins with defining goals and aspirations, which set the foundation for effective implementation.

Functions of Strategic Human Resource Management

The SHRM offers the following functions:

• Employee Engagement: For every business, increasing employee engagement is essential to success. This benefits the corporation and aids in the retention of talent because engaged people are often content with their employment, take pride in the organization, and think their employer recognizes their particular contributions. Highly engaged employees are far less likely to leave their jobs and are much more likely to be secure and efficient.
• Introduce Best Practices: The SHRM advises company owners to choose impartial interviewers who have been educated to follow a systematic interview process that guarantees confidentiality. Exit interviews provide valuable information that may be used to improve the business. According to a study by SHRM, providing telecommuting options, sabbaticals, exercise centers, and transportation subsidies significantly reduces turnover.
• Teach Tools and Techniques: These tools are used to interact with employees and associated processes across the hiring process. 
• Improve HR Effectiveness: You will be able to comprehend the staff you have and how they assist in achieving your aims and objectives by evaluating your present HR skills. You have to additionally do a skills inventory for each employee. You can identify which workers are specialists in various fields using skills inventories.
• Publish Research: Research on human resource management evaluates the efficiency of HR procedures. The systematic, academic research method includes several phases, including mass surveillance, analysis, and conclusion-making.

Types of the Strategic Human Resources Management

The following are the types of Strategic Human Resource Management:

• Recruitment and Selection 
• Offering employee job 
• Learning and Development 
• Creating regulations that impact the whole organization’s working environment. 
• Compensation and Advantages 
• Resolving job difficulties of current workers. 

Difference between SHRM and HR Strategies

• Human resource management, or HRM, is the systematic and organized management of an organization’s human resources. SHRM is a management task that entails structuring HR methods to focus employees’ efforts on achieving an organization’s objectives.
• The HRM process is a reactive one. On the other hand, SHRM is a management activity that is proactive.
• SHRM promotes long-term company objectives and results, whereas HRM supports short-term business goals and outcomes.
• A typical HRM is a cost center when it comes to responsibility. as opposed to a strategic HRM, which is a hub for investments.

Traditional HRM versus SHRM

Basis	HRM	SHRM
Responsibility for HR programs	Staff members in the HR department.	Line managers; all managers with people responsibilities are HR managers.
Focus of activities	Employee relations—  assuring compliance with legislation, employee motivation, and productivity	Collaborations with internal (employee) and external (customers, stakeholders, and public interest organizations) groupings
Role of HR	Reactive and transactional	Proactive and transformational, change leader
Initiative for change	Slow, disjointed, and fragmentary, not integrating with bigger concerns	Initiatives for quick, flexible, and systemic change that work with other HR systems
Time horizon	Short-term	Consider various kinds of time frames as necessary (short, medium, or long-term)

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4 Components of Strategic Human Resource Management

Examine the four components of the Strategic Human Resource Planning and Management Program:

• Human Resources: These are the primary source of any association which can provide it with a competitive advantage through its knowledge, judgments, right skill set, and intelligence. 
• Activities: The activities include HR policies, programs, and practices that form a means of gaining a competitive edge in the market.
• Plans and patterns: To achieve a good match between the HR strategy and the business strategy of the company, as well as between the various HR operations, patterns and strategies are created.
• Purpose: The use of human resources, including their patterns and practices, is directed towards attaining the organization’s goals by adhering to its strategy.

Examples of Strategic Human Resource Management

The following are the examples of SHRM:

• Training and Development: Determining the training and resources that people need to further their careers
• Employee Remuneration and Benefits Administration: Designing remuneration and benefits programs that attract and retain employees.
• Performance Management: Creating the latest systems to track and improve employee performance 
• Employee Relations: The improvement of employer-employee relations is seen as being crucial by many firms, therefore this becomes a strategic priority. Creating a procedure for reporting, looking into, and addressing employee concerns is one of the practical actions that will support this plan.

Importance Of Human Resource Planning

Let’s discuss the importance of Human Resource Planning:

• It reviews the skills and capabilities of existing employees: With human resource planning, you can review the capabilities and skills of your current employees and estimate if they are performing their work tasks adequately or require fresh training.
• It anticipates and adapts to industry developments: Human resource planning may assist your organization respond to the industry’s quick changes and improvements. To manage business operations in new marketing niches, you can assess whether you would need to establish and budget for new jobs inside your organization.
• It allows the company to stay competitive: You need to employ the appropriate people and provide them with the proper incentives to stick with your firm if you want to remain competitive in your sector.
• It ensures the company’s long-term growth: Human resource planning also helps to consider how your company might grow and cope with inevitable changes in the future.

Key Steps In Human Resource Planning

The following are the key steps involved in Human Resource Planning:

• Analyzing the business objectives of your company: The most effective way to develop a successful HR strategy is to analyze the business objectives of your company. You can determine the best ways to contribute to the long-term objectives of your organization if you have a clear understanding of what those objectives are.
• Taking an inventory of your available human resources: It would help to do an inventory of your current employees and review their performance for your company. You can consider the total number of employees you have in your business, in each department of the company, and in each job position. 
• Predicting human resource demand and supply requirements: An organization’s need for human resources may fluctuate from time to time based on both internal and external circumstances. Competition, the political and economic environment, technical advancements, governmental policies, etc. are examples of external variables.
• Undertaking gap analysis: Gap analysis is a technique for comparing your company’s present performance level with the performance level you could ideally expect from your personnel.
• Creating a human resource action plan: It is necessary to have a human resource strategy plan to apply changes in your company to deal with talent deficiency or surplus.
• Monitoring the plan and getting feedback: Monitoring and getting feedback are the sixth and last phases in the human resource planning process. After the action plans are put into effect, they must be evaluated, controlled, and checked against the established criteria.

Human Resource Planning Tools

The following are some of the best human resource planning tools:

• Surveys: You may gather information on employee skill and productivity levels, the efficacy of training programs, and employee satisfaction with workplace culture and work environment by conducting human resource surveys.
• HR dashboards: With HR dashboards, you can collect and display a range of employee-related data that you can relate to and use in your human resource planning process.
• Scenario plans: Scenario planning is a technique for strategic analysis and planning that aids businesses in making educated assumptions about the future of their enterprise.
• Performance management systems: Company managers can rate and comment on employee performance using a software tool called a performance management system.
• Human resource management systems: A software program known as a human resource management system makes use of many methods and procedures to aid business process management, data management, and human resource management.
• Compensation and benefits analysis software: Planning, designing, maintaining, and administering employee compensation and benefits packages may be done with the use of the compensation and benefits analysis software.

Conclusion

By managing their staff more effectively, businesses may achieve their objectives with strategic human resource management definition. Companies can make sure they have the proper people in place to accomplish their goals by taking the time to create an SHRM strategy. Although creating an SHRM strategy might take some effort, the advantages outweigh the drawbacks. A well-executed SHRM strategy will not only assist you in achieving your organization’s objectives, but it will also assist in retaining top talent and maintaining employee engagement. Acquire a deeper understanding of Strategic HR Management via pursuing Executive PG Program in HRM from LIBA.