HR Business Plan Template
Unlock executive buy-in with our HR business plan template.Download The Template
Strategic Human Resource Management (SHRM): Top Tips & Benefits
Strategic human resource management is the key to one of the main goals for just about any organization’s HR or People Team: Becoming aligned with, closer to, and having a direct influence on a business’s goals and performance. The big question is, though: How do you forge that link?Build your very own HR business plan with the help of our template. Download it now.
- 1What Is Strategic Human Resource Management?
- 2Is There A Difference Between HRM And Strategic HRM?
- 3What Drives Strategic Human Resource Management?
- 4The Key Benefits Of Strategic Human Resource Management
- 5How Do You Implement SHRM?
- 6Which HR Programs Should You Start Focusing On?
- 7Are There Limits To Strategic Human Resource Management?
What Is Strategic Human Resource Management?
Strategic human resource management, often coined as SHRM or even referred to as ‘People Strategy,’ is the framework an HR puts forth to attract, manage, develop, and retain employees to meet an organization’s long-term business goals. Essentially, SHRM views and positions HR as a strategic partner and supporter of any business.
A huge part of this is often referred to as strategic human resources planning. Think of it as akin to workforce planning, except where specifically an HR team sits down and hashes out what they need, and what targets they need to hit, with the resources they have, to match the business’ ultimate goals.
In short, strategic human resource management typically exerts influence on:
Employer branding, talent attraction, and hiring plans
Day-to-day management and employee data changes
Retention measures, employee benefits, and fringe benefits
Organizational culture and change management processes
There is no single way to look at SHRM. Instead, it’s really about positioning an HR team as having a distinct influence over a business’s long-term success. Further to that, planning and allocating resources to exert that influence in the best ways possible.
Is There A Difference Between HRM And Strategic HRM?
The key difference is having a competitive advantage. Some may characterize HRM as HR teams keeping pace with an organization, whereas SHRM means strategically setting the pace of an organization through alignment with long-term goals.
At its core, though, the difference between HRM and SHRM is about prominence in the business. Strategic human resource management guarantees a spot at the table of senior leadership, as well as a voice, for HR and for the development of an organization’s people.
So, when a business finds and decides that people should be a priority, it is almost a natural evolution to go from human resource management to strategic human resource management.
What Drives Strategic Human Resource Management?
Put simply, people drive SHRM in so many ways. That’s because, as businesses recognize that people are their greatest asset, they begin to understand the additional need that people need to be satisfied in their roles and their organization to produce their best work.
So, the guiding principle of strategic human resource management is simple: keep your employees happy and watch your business flourish. And, as part of that equation, HR needs a spot at the table as the department most often tasked with managing and developing people.
That said, SHRM is a bit of a paradigm shift. In times past, business planning or goals may have influenced individual HR strategies that take place in an organization. Think of something like a push to hire a specific role or introducing a private insurance plan for employees.
While this is one way of doing things, it’s more that business strategy drove or wholly defined HR strategies. SHRM shifts things by suggesting that there needs to be two concurrent strategies: a business strategy and an HR strategy, aligned with one another and with strategies dictated by each.
What’s The Link Between SHRM And Workforce Planning?
To the above point, the relationship between SHRM and workforce planning is that the latter is often concerned with putting the plan into place. Matching the future needs of the organization with current resources, whereas SHRM takes a step back and understands where that process comes from, the demands on that process, and how it ultimately satisfies the workforce (rather than simply changing it).
What Role Does HR Analytics Play In SHRM?
Access to HR analytics, across your entire workforce, is an essential pillar of strategic human resource management. It affords HR teams the data they need to derive real insights to make decisions that power the business. It is a key reason why people analytics has become such a critical topic in recent years.
The Key Benefits Of Strategic Human Resource Management
A business and organization that embraces strategic human resource management is gaining access to some amazing benefits. The key ones include:
Future-Proof Planning – Embracing SHRM means staying on top of all your planning needs in line with your business. That means keeping an eye on where things are going, planning around them, and negating any nasty surprises that may come up along the way.
An Improve Corporate Culture – Empowering your HR function can have a host of trickle-down effects, one of which is an improved corporate culture. It shows that your organization is serious about its people, and can promote a culture of transparency, feedback, and employee wellness.
A Boost To Employee Performance – When HR is afforded a seat at the table, they can implement ways to make performance reviews, cycles, and learning and development opportunities (like development budgets per employee) more accessible, effective, and sustainable. Everyone gets better at what they do!
Higher Retention Rates – Employees who feel like they are the centrepiece of their organization are more likely to stick around. SHRM allows your HR function to focus on its people, and to create programs attuned to their current and future needs. That way, you keep your highest performers happy.
Effective Resource Management – When you let HR in on resource planning for your organization, it creates a more nuanced and effective planning process. HR is able to plan with what your organization has, what you need, and how your people can get you there. Saving time, money, and improving results.
Stronger Employer Brand – A culture focused on its people will become better at attracting people. Especially in a time when talent is in high demand, you want to make sure that your current employees are your greatest ambassadors. SHRM can help boost your employer brand.
How Do You Implement SHRM?
If you’re an organization looking to implement strategic human resource management, first you need to make the case to management that you belong at the table. This can be done through data, through persuasion, or simply by understanding what it’s costing organizations doing nothing about it.
Next, there are some steps an HR department can take to really get things going:
|Understand The Business & Vision||Your HR team needs an incredibly clear picture of where the business wants to go and the overall vision guiding that plan.|
|Identify Key Data Points and KPIs||Boosting data literacy across your HR function is imperative for SHRM to get off the ground. Identify which data matters and educate your team on why.|
|Assess Your Org (Both HR & Overall)||Strategic human resource management is kind of like a doctor-patient relationship. Assess the health and wellness of both your HR function and your org more generally.|
|Estimate Current & Future Needs Versus Resources||What do you have on hand and what will you need in the future? Amazing SHRM relies on looking into that ‘crystal ball,’ so start looking ahead!|
|Take A Long Look At Your Applications||Which applications are you using to manage your people processes, and are employees satisfied? Think about how to combine the tools you use to make life easier.|
|Evaluate, Learn, and Iterate||SHRM is not a one-time process. Much like any business, it takes time and it takes multiple bites at the apple. An HR function that is constantly trying and learning is what you need.|
A truly tangible place to start is by working within your HR function, and business overall, to craft a people strategy. It can serve as your roadmap to making SHRM a reality.
Which HR Programs Should You Start Focusing On?
Strategic human resource management will typically flounder without focus. If you have a people strategy to guide you, that’s a start, but you may also need to think about specific initiatives and programs that you want to undertake to make it a reality.
Many organizations will begin with their recruitment strategy, which is where SHRM can shine by focusing on:
Resources and hiring plans
Selection and sourcing processes
Interview structure and candidate experience
Potential automation in the process
Time-to-hire and other recruiting KPIs
This is just the beginning, other areas of focus for many HR teams may also include:
Onboarding – Where an HR function can focus on how an employee gets started at work, how productive they are from day one, and how connected they feel to a company’s culture.
L&D – Introducing programs that help match skill gaps in an organization, or focus on developing leaders in an organization that is scaling quickly.
Policies – Thinking about ways to strategically add, edit, or remove policies and how to introduce them to the organization on a wider scale (hybrid work, for instance).
Are There Limits To Strategic Human Resource Management?
The drawback of SHRM is often defined as the time it takes to get these initiatives off the ground, and how HR teams are often hounded with a thousand other smaller tasks that keep them from focusing on aligning their goals with the overall business strategy.
While that might be true, it is not an unsolvable equation. If HR teams can gain time back to focus on strategic topics, and even rethink the way they structure their department or org design in general, they can unlock the time they need back to focus on strategic HR.
One of the ways to do this is through an HR software. One that can save time, manage data securely, and even automate people processes across the business. This not only saves time but allows HR to rise up alongside the business, due to increased visibility and responsibility.
And, ultimately, that paves the way for making SHRM not only a possibility but an inevitability for ambitious HR teams who see their role as being at the table of senior leadership.
Get Exclusive Insights, Invites and More With Our Weekly HR Newsletter
© 2023 Personio SE & Co. KG