Strategic HRM: What is Strategic Human Resource Management (SHRM)
Strategic Human Resource Management (SHRM) is the way of managing human resources in an organization by aligning HR practices and policies with the major goals of the company.
It’s mainly used to improve the overall performance of the organization and outstand your competition.
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What is the Importance of Strategic Human Resource Management
It helps in the overall improvement of the organization. Besides that, here are some of the major reasons why Strategic Human Resource Management is important.
- It helps in aligning HR practices with organizational goals.
- It allows businesses to attract and retain top talent and gain a competitive advantage.
- It enhances the overall performance of the organization.
- It helps companies adapt to new changes as they occur in the organization.
- It focuses on recruiting and retaining the right talent that can match the criteria of your strategic development.
- It’s a cost-efficient practice as it helps in optimizing your workforce utilization while reducing the turnover cost.
- It helps in assessing and managing the risk related to human capital such as compliance, workplace safety, and employee relations.
- It encourages you to measure the metrics and check your analytics to check your growth and progress.
What is the Objective of SHRM
The major goal of Strategic Human Resources is to align all your HR practices to overall goals and objectives of the organization to enhance your company’s performance, gain success, and outperform your competition.
That way the contribution of HR directly impacts the success of organization and business growth.
What is the Scope of SHRM
The main goal of SHRM is the alignment of HR practices with organizational goals to achieve more success. Besides that, the alignment is also associated with overall business strategy, talent acquisition and retention, performance management, employee development, diversity and inclusion, employee engagement, change management, and the use of HR metrics and analytics.
Difference Between SHRM and HRM
| Category | HRM | SHRM |
| Scope | Focuses on routine activities like recruitment, training, performance management, and employee relations. | Goes beyond such traditional activities and plays an important role in alignment of HR practices to the organizational goals to achieve better success. |
| Goal | The goal is to manage personnel and admin tasks mainly to ensure compliance with policies. | The goal in SHRM is to associate the HR practices with the overall organizational goals and objectives to contribute directly to the business success. |
| Time Horizon | A short-term approach that focuses mainly on dealing with immediate concerns. | A long-term approach that takes into consideration how HR practices can support overall organizational growth and success. |
| Approach | More traditional and admin functions involved. | More strategic and forward-looking approach involved. |
| Integration with Business Strategy | May not always be aligned with overall business strategy. | Always aligned HR practices with business growth. |
| Employee Involvement | Often limited to routine tasks and compliance-related activities. | More involved in engaging employees in the strategic decision-making process. |
What are the Seven Steps of Strategic Management Process
Here are the seven steps of strategic management process:
- Establishing the mission, vision, and values.
- Conducting external analysis.
- Conducting internal analysis.
- Formulating the strategy.
- Implementing the strategy.
- Evaluating the performance.
- Adapting and adjusting according to the metrics and analytical data.
What are the Five Steps Model of Strategic HRM
The five steps model of strategic HRM is as following:
- The first step is to do an environmental analysis to identify the opportunities and threats that may impact your business.
- The second step is to analyze your organization for its strengths and weaknesses.
- In the third step, you formulate the HR strategy based on your finding of both the analysis you performed in the first two steps.
- Then, you implement that strategy.
- The final step would be to evaluate and monitor the success of your SHRM.
What are the Five Ps of Strategic HRM
The five Ps of Strategic Human Resource Management model are the following:
- Policy Formulation: It refers to creating HR policies and practices that will align the HR practices to the organizational goals. These policies can be related to recruitment, training, performance management, compensation, and employee relations.
- Processes: This includes implementing the HR practices meant for alignment of organizational goals.
- Programs: This refers to the various HR practices and initiatives you start to directly impact the growth of the company.
- Performance: It focuses on measuring and evaluating the performance of the initiatives you have taken so far.
- Processes of People Development: It shows how important the development and nurturing of an organization’s human capital is.