What is Strategic Human Resource Management?

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.

Managing Contemporary Change Issues in the Human Resource Asset

If you were asked what the most important asset for your business is, you would probably think of the huge sacrifice in form of capital that you made, your equipment, technology, unparalleled marketing strategy, excellent customer service or even your intellectual property. While all these are important in giving the business an added advantage, the key asset a company needs to link together the other assets is the Human Asset. The rest will all need a human hand to get them moving, don’t you agree?

We find that in most cases, the success or failure of an enterprise will largely be proportional to the quality of its human resource. Any plans to move the business forward will heavily lean on the caliber of the human resource.

However, this is an asset whose environment is constantly changing. Its many facets are never fixed. Thus, the quality and morale of the human resource need to be monitored on a continual basis as the internal and external environment surrounding the business keeps evolving.

There are many change issues that affect this very important resource. In turn, this affect its quality, morale, productivity and ultimately the business’ productivity and success. This article tackles the most critical contemporary change issues affecting HR and how to manage them. These will include:

Cross generational challenges.
Technological advances and human resource asset.
Need to align the human resource strategy with the overall business strategy.
Need to be a change agent.
Measuring the value of the human resource asset.
Cross-Generational Challenges
Never before has there been a cross generation of people working in the same organization as it is today. The many ideas, opinions and ways of doing the most basic of things can be baffling, to say the least. Talk of baby boomers, generation X, Y and the Millennial, all are to be found in today’s work environment. While the baby boomers are beginning to retire, the rest are now mandated to take up management positions that are being left vacant.

Intergenerational conflicts are likely to occur as the values, priorities, focus, education and upbringing of these generations are way apart. The younger generation is less concerned with loyalty – as opposed to the older generation – and more concerned with what the company can do for them.

Some of the characteristics that are common in the younger generations, and especially the millennials who are the majority, include:

The fact that they are highly educated and risk averse;
They are technologically savvy;
Conscious (of health, social, economic and environmental issues);
They value transparency and open communication;
Most are entrepreneurial;
Their constituent is such that they are diverse in terms of race, tribe etc;
They are the microwave generation who ‘want it now’, impatient and adventurous;
Millenials want to stay true to whom they are and their individuality and they are global citizens, not to be confined to a certain culture.
On the other hand, the older generation is largely opposite. Most of our parents are jealously loyal to their employers and even their stories after retire are of nostalgic fond memories of their jobs. Which stories is your daddy, mummy or grannies fond of?
So how is an employer to handle such diversity between the generations? Below are some ways that organizations have used and can use in handling the multi-generational issues:

Encouraging the expression of the younger generation’s creativity, education and enthusiasm by creating innovation hubs.
Creation of mentorship programmes where the older employees mentor, coach and nurture the younger.
Knowledge retention efforts – by allowing the older employees to retire but still continue working. Knowledge management should also be embraced whereby knowledge is centralized and easily accessible.
Leadership training to transition the Millenials into leadership positions.
Embracing up to date technology to enable the Millenials feel at home and become more productive, while training their ‘Parents’ to become more technology friendly. Things like the Intranet and IT Systems are worth a try.
Decentralization – This enables the older ones to learn new things and the ever adventurous Millennials to explore new areas.
Talent management – This enables employees to stay true to their authenticity and fit into their area of expertise.
Unity in diversity – Allowing employees from different backgrounds to work together rather than segregating them.
Work-life balance – This can be done through such plans as flexi-time; employee welfare programmes, holidays and leaves.
Transparency and clear communication- This enhances understanding between management, the older and the younger generations.
Technological Advances and Human Resource
In today’s post modern organization, technology is at the core. An organization will either embrace technological advances to stay relevant or die off. The human resource or people are the drivers of this technological change, and so the HR Department is critical in all this. It is predicted that Millennials, (the tech-savvy generation), will make up 75% of the workforce by 2020. This confirms that there is no running away from technology.

The Relationship Between Human Resource Practices And Business Strategy In A Business Organization

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.

Approaches to Strategic Human Resources Management

A Human Resources Executive as a member of top management must determine what policies, programs, practices, and approaches will contribute most to the realization of the organization objectives. This means that in his new role he must be responsible for initiating and implementing-at all levels of management-the most effective utilization of the human assets.

The primary function of the human resources position is to make a major contribution to the development and realization of the organization short-term and long-range objectives while enabling each employee to develop to the fullest extent of his potential. This requires a catalyst and business effectiveness consultant as contrasted with the traditional role of the personnel director.

With these thoughts in mind, the position of the vice-president-human resources might be defined in this way. He reports to the president. His broad function is to formulate, recommend, and implement policies, procedures, and plans to assure the most effective planning, recruitment, selection, utilization, motivation, development, and compensation of the organization human resources; contribute to the development and achievement of the organization long-range and short-term objectives by initiating and implementing employee relations practices which will enable and encourage each employee to realize his personal goals while maximizing his contribution to business effectiveness; provide for the resolution of management problems and the realization of opportunities through innovative approaches to human resources management.

The principal responsibilities of the human resources executive are these:

• Formulate and recommend human resource objectives for inclusion in the organization overall objectives.

• Identify the potential contribution of good human resource management to organizational objectives.

• Identify management problems that can be resolved and opportunities that can be realized through improved effectiveness in human resource management.

• Formulate, recommend, and implement employee relations policies designed to improve individual productivity, job satisfaction, and profitability.

• Make managers aware of their full responsibilities in the management of the human resources entrusted to them.

• Provide the necessary tools, techniques, and methods which foster the development of a business climate conducive to employee innovation and development.

• Establish the necessary procedures and practices for human resource planning, recruitment, selection, utilization, motivation, development, and compensation. Insure that these are incorporated into every manager job performance evaluation.

• Develop and staff the employee relations function to make provision for innovative approaches to labor and union relations, personnel practices and services, training and development, communication, community relations, benefit plan development and administration, and problem solving.

• Serve as a catalyst and business effectiveness consultant in initiating and implementing new approaches to human resources management.

This position can exert a tremendous influence on business results. Therefore, a few words need to be said about each principal responsibility.

Just as important as market position, technological leadership, return on investment, and profitability are organization human resources. Thus its objectives must reflect this hierarchy of importance.

HR Matters – Don’t Treat Human Resources As DIY

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).