5 min read | 23 July, 2021 By Laura Sands
Strategic human resource management is shifting the way business owners see the HR function. It wasn’t so long ago that the HR department was viewed as a cost centre staffed by administrators and efficient troubleshooters. But times are a-changing and strategic human resource management is increasingly recognized as a crucial way of working.
Strategic Human Resource Management defined
The CIPD describes strategic HRM as “a framework for employees to be hired, managed and developed in ways that supports an organisation’s long-term goals.”
The concept of strategic human resource management was developed in the early 1990s and then popularised in the early part of the 21st century. You may see it shortened to strategic HRM or referred to as people strategy. But whatever you call it, strategic human resources has become an essential component for ambitious SMEs and larger corporations alike.
How does strategic HRM differ from everyday HR and people management?
'What do we need to do to keep the wheels turning?’
Everyday or ‘traditional’ HR and people management is an administrative and reactive approach to managing people. At its simplest, traditional HR is about keeping the business running smoothly by ensuring there are enough people to do the work and that everyone is happy and operating legally. In this instance, the HR department deals with grievances, updates policies in line with legal requirements and ensures everyone gets paid on time. Recruitment and training needs would be planned in line with requests from across the business, and employee health and wellbeing would be dealt with on a case-by-case basis as and when needed.
'What do we need to do to support the business vision?’
In contrast, strategic HRM takes a wider, more proactive view. Rather than dealing with issues as they arise, a strategic approach to HR management links people management to business goals and the broader vision. By asking instead, ‘what do we want to achieve?’, a strategically focused HR department uses employee expertise and energy to deliver those goals.
Strategic HRM uses a wide range of tools to deliver company goals – to attract, retain, develop and reward employees to support the organisation and improve the employee experience.
Post-pandemic, why is strategic HRM so important for every business?
While throwing so much into the air, the pandemic focused our attention on the importance of a solid people strategy.
With altered employee expectations and continuing uncertainty, a reactive approach to HR is no longer enough. Businesses who want to thrive must instead consider a more strategic approach to HRM.
There are several areas where strategic HRM will be especially important.
Strategic HRM would take this into account by for example arranging medical insurance for employees or giving staff access to a private GP. It would also proactively support employee wellbeing, especially considering some employees have been disproportionately affected by the stress of lockdown. The benefit of this would be a healthier and more productive workforce. In contrast, waiting for issues to arise may cost businesses dear with high absences, medical insurance claims and presenteeism.
Ready to implement strategic HRM within your business? Here are five ways you can start today.
1. Focus on the future
Strategic HRM focuses on future-proofing an organisation to meet its goals. To do this, businesses must develop an HR strategy that aligns with the business vision and supports the overall business strategy.
2. Review your workforce
A solid understanding of the workforce lies at the heart of strategic HRM. Without this, it’s impossible to understand what you need to change or keep to achieve business goals.
Workforce planning is an essential element of strategic HRM and focuses on getting employees with the right skills, in the right place, at the right time. Once you’ve understood your existing employee profile, you can start to build plans to hire new employees and nurture your existing workforce to ensure their talents can support your business goals.
3. Set measurable goals
Strategic HRM requires a range of measurable goals to ensure success.
These goals can include hard and soft but should be focused on details which support the organisational objectives. For instance, resourcing a new sales team with ten employees is easy to measure and gauge success for. But how will you measure a positive employee experience? It’s important to consider how each goal will be measured when you are in the planning stage.
4. Leverage HR software
Getting the right HR software in place can support a business as it moves towards strategic HRM. HR software can:
5. Continuous reviews
As with all strategic approaches, it’s essential to regularly check in with the wider business strategy to ensure they are aligned. Has the operating environment changed, and will this impact the success of a certain hiring initiative? By taking this approach you can ensure your business strategy is informed by the HR strategy as well as vice-versa. This may allow you to develop a competitive advantage that would otherwise have been unconsidered.
There’s no right or wrong way to incorporate a more strategic approach to HR into a business. By focusing on what you want to achieve in the future and agreeing what your future workforce should look like, you can start incorporating strategic human resources management techniques into your SME.