In brief, it is an approach that brings a competitive advantage by aligning human resource management with wider business strategy. Unlike traditional HR, which primarily focuses on administrative duties, legal compliance and basic staffing requirements, SHRM brings company goals and objectives into the equation. The HR department no longer acts in isolation, but is involved in the planning and deployment of broader practices and initiatives that elevate business performance. SHRM takes a forward-thinking approach to talent acquisition, retention and development, creating a workforce capable of meeting long-term needs. It also accounts for corporate culture, considering approaches that result in high-achieving work environments. Essentially, SHRM is a proactive take on HR that ensures a company’s greatest asset – its people – are managed in such a way as to contribute to continued growth and success.
What Are the Benefits of Strategic Human Resource Management?
SHRM is all about bringing added value to an organization. Its benefits are many, including:
A more effective and inclusive work culture Increased productivity Greater job satisfaction and employee retention Efficient use of all available resources A competitive advantage through innovation A strong reputation as a business focused on its people Improved customer service
All in all, SHRM makes for a better approach to business, future-proofs your position and boosts your bottom line.
What Are the Central Features of Strategic Human Resource Management?
To understand how to implement SHRM, it’s important to first understand some of the key features that contribute to a successful approach.
Effective Recruitment Strategy
Strategic recruitment ensures the right skills are available within an organization at the right time. It’s not about being reactive to business needs, but being proactive by predicting future talent requirements and taking steps to meet them. A good strategy should focus on both internal and external recruitment, assessing how to progress successful employees and how to fill skills gaps that may impact productivity. The recruitment process should be thorough and consistent, since a bad hire is both costly and time-consuming. HR teams must work with relevant managers to determine a ‘best possible’ candidate profile – detailing key competencies, skills, experience, behaviours and values that will help the business meet its goals.
Efficient Onboarding
Talent selection is only the beginning of building an effective workforce. Any new hire – either internal or external – must be introduced to the company and their role within it as quickly and efficiently as possible. SHRM makes onboarding a top priority, giving employees the tools, knowledge, resources and support they need to hit the ground running. This not only ensures new talent is used to full effect, but also allows staff to integrate well, resulting in greater retention of new hires.
Appropriate Reward
SHRM recognizes that an organization is nothing without its people, and as such they should be rewarded fairly for their contributions. Without recognition, employees feel undervalued. Their productivity drops, and their commitment to business goals weakens. HR departments must work with top-level management to determine appropriate pay scales, benefits packages and reward initiatives to encourage maximum engagement.
Performance Tracking
To ensure human resource management stays aligned with strategic objectives, systems must be in place to track performance of both individuals and teams. How you choose to approach this depends on the nature of your business. It may be that you track and analyze key performance indicators (KPIs), such as customer acquisition or sales figures, or you may hold regular performance reviews at both an individual and team level. Whichever system is best for your needs, HR must play a key role in the process. It’s no good having performance data if it’s not fed back to the teams responsible for making sure your resources are contributing to business growth.
Monitoring of Retention and Turnover
Monitoring employee retention and turnover rates is key to spotting issues in your organizational culture. In a strategic approach to human resource management, this means looking beyond top-level figures and delving into the finer details. For example, if you have a relatively low company-wide turnover rate, but it’s all concentrated in a particular department, there may be an issue within that team’s structure. It’s also important to note that tracking retention alone does not give an accurate picture of what’s going on within your business, since the calculations do not account for anyone who joined and left within the timeframe measured. It’s crucial to evaluate both retention and turnover, and to do so in detail to inform decisions on HR strategy.
Continued Development
The key focus of SHRM is to get the most out of any given workforce in terms of productivity, innovation and customer service. To do this, you must place emphasis on enabling employees to reach their full potential. A successful strategy involves commitment to ongoing professional development, allowing current staff to expand their skills, knowledge and experience.
Open Communication Practices
It goes without saying that communication is a core feature of effective SHRM. Mechanisms should be in place to enable all staff, regardless of their seniority, to contribute to discussions around organizational practices. Employees should feel that their opinions are valued and have confidence that any issues they raise will be noted and addressed. That said, there are several steps that all organizations should consider taking.
Define Business Objectives
This step is crucial. There needs to be a clear understanding of what the business is looking to achieve – both from a short- and long-term perspective. Document these objectives, and bring HR personnel and top-level staff into the discussion so that everyone is on the same page. You should also communicate business goals to the wider workforce, since these are the very people who will help you achieve them.
Assess Your Existing Workforce
Look at the talent you already have and how it is being utilized. Take the time to conduct a skills inventory for each employee to get an accurate picture of organizational strengths and weaknesses. Engaging employees at this stage will help to identify those who wish to progress, those who may need additional support and those with skills that have thus far been overlooked. You may also find they bring key insights into how to improve business performance from a ground level.
Identify Barriers to Success
With your business objectives clearly defined, and an understanding of your current HR capacity, you should be able to pinpoint weaker areas that may prevent growth. This could be a skills gap, a lack of relevant tools or a structural issue. Again, bring HR into the discussion here to evaluate these barriers and explore how to address them.
Predict Future Needs
Having assessed your current position, you can now begin to forecast your needs. Look at the talent you require to achieve your objectives against that already present – essentially supply and demand. This will help to inform job design, recruitment and development. It will also help to determine if your existing HR practices are sufficient. For example, if it’s clear certain employees are being under-utilized, you need to revisit how you allocate talent resources.
Equip Employees With the Right Tools
Regardless how talented your workforce is, if you don’t equip staff with the right tools, you limit their potential. This can cause frustration among employees, who may start to look elsewhere for an employer that will allow them to use their skills to full effect. To avoid losing top talent, HR should collaborate with all departments, and ensure the relevant tools and resources are made available. This may involve some initial investment, but this is justified by the returns. You’ll see a boost in productivity and increased job satisfaction (and therefore greater retention).
Introduce Development Programs
Another SHRM practice that is key to retention is employee development. This should be considered from the outset with effective onboarding and continued throughout an employee’s tenure. Staff who are given the opportunity to expand their skill set are typically more engaged and loyal to the organization, and subsequently more invested in helping it succeed. Development programs also help to fill skills gaps internally, saving you the time, money and effort involved in recruitment.
Design Reward Initiatives
Recognition and reward are key drivers for productivity, and having structured practices in place provides your workforce with increased motivation. You can implement reward initiatives for good performance and/or length of service, but whatever the case, they should be applied universally and designed in such a way as to avoid bias. If a handful of employees are continually singled out for recognition, it can lead others to feel undervalued, cause resentment and, at worst, create a hostile work environment.
Collect Data on KPIs
KPIs aren’t something typically associated with HR, but they play a key role in a strategic approach. Without measuring their impact, you have no way of knowing if the policies you’ve introduced bring any value. Go back to your business objectives, set KPIs that will enable you to track progress, and regularly evaluate the data to keep your HR strategy on track.
Continually Review Your Approach
SHRM is not static. It should continually evolve in line with business growth and be regularly reviewed to assess impact. Have a timeline in place for when these reviews will be carried out, and work towards ongoing improvement.
Final Thoughts
No business can afford to have its greatest asset – its employees – being under-utilized. Strategic human resource management places emphasis on people to achieve profit and is an approach that, when implemented effectively, brings significant gains and organizational growth.
