What is strategic human resource management?
Strategic human resource management is the connection between a company’s human resources and its strategies, objectives, and goals. The aim of strategic human resource management is to:
- Advance flexibility, innovation, and competitive advantage.
- Develop a fit for purpose organizational culture.
- Improve business performance.
In order for strategic human resource management to be effective, human resources (HR) must play a vital role as a strategic partner when company policies are created and implemented. Strategic HR can be demonstrated throughout different activities, such as hiring, training, and rewarding employees.
Strategic HR involves looking at ways that human resources can make a direct impact on a company’s growth. HR personnel need to adopt a strategic approach to developing and retaining employees to meet the needs of the company’s long-term plans.
Operational HR is an aspect of human resource management that is closely linked to strategic HR. Operational HR is concerned with the everyday functions that are necessary to meet your employees’ needs. Operation HR is the part of HR that employees come into contact with, such as scheduling and payroll. For more information on how to streamline HR operations, set up a call with one of our reps today and learn how Deputy can make business operations a breeze.
Why is strategic human resource management important?
Companies are more likely to be successful when all teams are working towards the same objectives. Strategic HR carries out analysis of employees and determines the actions required to increase their value to the company. Strategic human resource management also uses the results of this analysis to develop HR techniques to address employee weaknesses.
The following are benefits of strategic human resource management:
- Increased job satisfaction.
- Better work culture.
- Improved rates of customer satisfaction.
- Efficient resource management.
- Proactive approach to managing employees.
- Boost productivity.
Seven steps to strategic human resource management
Strategic human resource management is key for the retention and development of quality staff. It’s likely that employees will feel valued and want to stay with a company that places a premium on employee retention and engagement. Before you implement strategic human resource management, you will need to create a strategic HR planning process using the steps below:
- Develop a thorough understanding of your company’s objectives
- Evaluate your HR capability
- Analyze your current HR capacity in light of your goals
- Estimate your company’s future HR requirements
- Determine the tools required for employees to complete the job
- Implement the human resource management strategy
- Evaluation and corrective action
Since the success of strategic HR is dependent on how well it links to your company’s goals, you need to have a thorough understanding of your aims, objectives, and mission. You’ll need to be able to articulate both your short and long-term plans for growth to the relevant HR personnel. Ensuring clear communication of your company’s goals will make it easier for HR personnel to formulate an effective resource management strategy.
Evaluating your current HR capabilities will enable you to understand the employees you have and how they contribute to fulfilling your goals and objectives. Additionally, you should also undertake a skills inventory for every employee. Skills inventories help you to discover which employees are experts in particular areas. It also helps you to identify the employees who have an interest in being trained in a particular aspect of your company.
An assessment of your HR capacity will help you to recognize barriers and implement a plan of action to capitalize on opportunities and effectively deal with threats. Strategic HR personnel will analyze the number of employees as well as their skills and will work with senior leadership to identify ways to better equip employees to serve the needs of your company.
After an analysis of your company’s employees and skills has been done in relation to your objectives, it’s time to forecast your HR needs. The forecast should be done in relation to:
- Demand – A prediction needs to be made in relation to the number of employees with the associated skills that will be required in order for your company’s future needs to be met.
- Supply – Looks at the employees and skills that are currently available to help your company achieve its strategic goals.
Forecasting your company’s future HR requirements also determines the following:
- New jobs and roles required to secure the future of the company.
- Skills required by current employees to undertake the responsibilities of new jobs and roles.
- Whether your employees’ expertise are being sufficiently utilized.
- Whether current HR personnel and practices can accommodate the company’s growth.
HR personnel need to liaise with the appropriate departments to find out how the tools used by employees impact on their ability to perform their roles. For example, an audit of hardware and software can be undertaken jointly with the I.T department to identify gaps in tools that will facilitate a more organized workforce. For example, where a company employs hourly staff, it’s crucial to utilize workforce management software. This software manages important HR functions such as scheduling, holiday entitlement, and sick leave.
Deputy provides the functionality to effortlessly manage your employees’ hours and time. This enables your employees to focus on the tasks identified in the strategic HR plan that have a direct impact on growing your company. Sign up for a free trial and see how Deputy can support your strategic human resources management.
After the analysis and forecast of your company’s HR requirements have been completed, it’s time to start the process of expanding your workforce and developing current workers to equip your company for future growth. You can achieve the implementation of your human resource management strategy by doing the following:
- Start with the recruitment stage – At this point, HR professionals begin searching for candidates who possess skills that have been identified during the HR strategic planning process.
- Organize a selection process – Interviews and other selection criteria take place at this time. Interview questions such as “what are your salary requirements?” and relevant tests will be used to assess whether the candidate is suitable to carry out the role.
- Begin hiring applicants – Your company will make the candidate a job offer after all appropriate checks have been carried out.
- Design onboarding and training – Onboarding is a key determining factor as to whether an employee remains with a company. A comprehensive onboarding and training package must be put in place to increase employee retention.
HR personnel should decide on a timeline to carry out a strategic HR management review. This review will track the progress made and also identify areas for improvement. The review should be measured against whether changes are helping your company to achieve their goals. Corrective action must be taken if strategic human resource management is failing to meet its objectives.
Strategic human resource management articles
Several articles have been written about strategic human resource management to help companies to implement this process.
- Science Direct has published an article exploring the relationship between strategic human resource management and the performance of a company. This article also explores the link between entrepreneur orientation and strategic management and performance.
- Another strategic human resource management article, published by Sage Journals, looks at whether there’s a relationship between strategic human resource management and organizational commitment.
- Emerald Insight published an article about whether strategic human resource management practices have an effect on performance. The paper is based on research, which found that training, development, and pay are the strategic human resource management practices that had the greatest impact on employee performance.
Human resource strategies examples
With more than two million employees, Walmart is the world’s largest employer. This retail giant places a premium on the role of HR to drive and grow its business. The emphasis on the value of employees has been evident from the start when Walmart’s founder, Sam Walton, named the HR department the ‘people division.’
HR Magazine uses Walmart as an example of how strategic human resource management can be used to establish a profitable company. The article provides details about how Walmart aligns its seven overriding strategies (price, operations, culture, key item/products, expenses, talent, and service) with human resource strategic management, for example:
- Operational success is achieved because Walmart invests in continuous training and learning for its employees. Walmart also seeks to empower its employees to take ownership of their work for more successful teamwork.
- Company culture is emphasized because Walmart managers attend cultural training at the Walton Institute. The Walmart culture is defined by managers having an entrepreneurial mindset that encourages a problem-solving approach.
- Connecting people to products is where everyone at Walmart, irrespective of their position, has to focus on how to provide a better customer experience. Part of Walmart’s HR strategy is to train managers to make decisions in relation to customers in their store as quickly as possible.
In addition to Walmart, Human Resources MBA compiled a list of 30 of the world’s most innovative HR departments. This list contains examples of companies that use human resources strategically to grow and strengthen their market position. These companies include:
- FedEx has a ‘People-Service-Profit’ philosophy that demonstrates its belief that. if employees are taken care of, they’ll take care of customers in return. As part of fulfilling this slogan, FedEx undertakes a yearly survey and feedback program where employees provide their opinions on different aspects of the organization. The results are analyzed and, where possible, action is taken to improve employee conditions.
- Nissan uses a philosophy called kaizen to help its employees to always keep striving to make improvements to how they work. This approach starts during the recruitment stage and new hires are encouraged to keep improving so that they can stand out. Other strategic human resource management practices at Nissan include leaders being given the independence to hire and build their team.
- Alliance Boots GmbH is founded on the philosophy that Boots employees are part of a family. Boots encourages a stress-free work environment and assists managers in being supportive of their teams. Boots values vocational education and was one of the first companies to provide formal accreditation for its employees.
Strategic HR services
Strategic human resource management is important for every company. Your company doesn’t need to employ a specific number of employees before you start to consider implementing strategic human resource management principles. In fact, if you have a plan to grow your business, you should be thinking about linking this growth to strategic human resource management. Some companies outsource this part of their business because they don’t have an in-house HR function. Strategic human resource services provide full-service HR functions including developing a human resource management strategy. Strategic HR services help to take away the burden of both operational and strategic management to facilitate the growth of your business.
To facilitate your company’s future growth, you should use tools that free up your time. Sign up for a free trial of Deputy to see how we can help you with the time-consuming aspect of employee scheduling, so you have more time to work on the strategic aspect of your business.