Strategic human resources management is best understood as a proactive approach to human resource management aiming to integrate HR practices and the organization's overall objectives. John Bratton defines it as a process that aids the human resources division in maximizing the potential of its staff through organizational design, talent management, leadership development, and strategic planning.
John Storey coined one of the most recognized strategic human resources management definitions. He defines SHRM as a distinctive approach to employment management that seeks to achieve competitive advantage by strategically deploying a highly committed and capable workforce.
In line with Storey's strategic human resources management definition, Dave Ulrich proposed a similar definition. Ulrich found three main aspects: HR function as a strategic partner, alignment of HR practices with overall business objectives and the importance of linking HR to the overall strategy. Dave Ulrich defines SHRM as linking the HR function to the organization's overall business strategy. It involves aligning HR practices with the organization's goals and objectives and ensuring that senior management sees HR as a strategic partner.
Patrick Wright is another renowned scholar who sought to define SHRM. According to Wright, strategic human resources management is a process that integrates the management of people with the organization's strategic needs, ensuring that the organization has the right people with the right skills in the right places at the right time to achieve its objectives.
There are many definitions for strategic human resources management proposed across the literature. However, what is common is an alignment of the hr function to overall organizational objectives.
Conceptualizing Strategic Human Resources Management
Strategic human resource management has emerged as an important issue in the strategic direction being adopted by organizations. The response of organizations to the dynamics of the world of work has been to create an integration of HR and business strategies. Research has found that strategic human resources management initially focused on administrative tasks. These tasks included hiring, dismissal, and benefits administration. The emphasis on SHRM has since switched to strategic concerns, including talent acquisition, employee development, and performance management, as organizations have grown more intricate and competitive.
The 5 steps of strategic human resources management have benefitted organizations. According to research by the Society for Human Resources Management, 7 out of 10 HR professionals believe that the 5 steps of strategic human resources management are essential for business success.
Research suggests that organizations adopting the 5 steps of strategic human resources management record high organizational performance. Also, they record higher employee satisfaction.
The fundamental aim of the 5 steps of strategic human resources management is to generate organizational proficiency by equipping the organization with the skilled, engaged, committed and well-motivated employees it needs to achieve sustained competitive advantage.
Strategic human resources management encompasses three main objectives. First, integration must be accomplished through horizontal and vertical alignment of HR objectives with business strategies. The second goal is to provide guidance in a dynamic work environment so that the organization's business needs and its employees' individual and collective needs can be satisfied by creating and applying coherent and useful HR policies and programs.
Finally, strategic human resources management aids in creating a business strategy by highlighting ways that the company can take advantage of the benefits that come from the capabilities of its people resources.
Related: What is Human Resources Strategy?
The importance of strategic human resources management
When looking into the 5 steps of strategic human resources management, it is important to interrogate why it is essential for organizations. Although challenging and complex, the 5 steps of strategic human resource management are extremely necessary for organizations that seek to accomplish their strategic objectives.
There is literature to support the importance of the 5 steps of strategic human resources management. According to research, organizations that strongly focus on strategic human resources management record higher employee engagement, productivity, and profitability.
The 5 steps of strategic human resources management are linked to the benefits of strategic human resources management that Fred R David discusses in this book, 'Strategic Management.' Fred R David lists a framework for improved coordination and control of activities and reduced effects of adverse conditions and changes as the top benefits of strategic human resources management.
Looking at the 5 steps of strategic human resources management, I can list talent retention and enhanced customer experience as core benefits. Research published in the Iranian Journal of Management Studies suggests that organizations that invest in steps of strategic human resources management are 20% more likely to retain their top talent.
Related: What is human resources management?
5 steps of strategic human resources management informed by Dave Ulrich's HR Model
Some experts think there is a uniform set of procedures that all organizations can follow, while others think the procedures should be customized to meet the unique requirements of organizations.
Dave Ulrich's HR Model has brought together the argument about the SHRM steps. The model offers a framework for comprehending how HR may support the company's strategic objectives.
The Ulrich Model does not specify a single set of steps for SHRM. However, it allows organizations to develop their unique approach to SHRM. This flexibility has helped to make the model popular among HR professionals.
1. Assess the current situation
The primary objective is a thorough understanding of the organization's goals, objectives and current workforce. During this step, there is a great need to evaluate the external environment, which includes the political atmosphere, market dynamics, and regulatory framework.
According to Ulrich, HR is a strategic partner to the business at this step. As a partner, HR will aim to align all its practices with the company's overall strategy and ensure that the human capital is leveraged to achieve business goals.
A basic management development program can help senior management comprehend short- and long-term plans for the organization and its employees. Strategic human resources management emphasizes communicating the organization's goals across all levels to make the resource management strategy more effective.
2. Envision/Forecast the future
This is done through an assessment of the HR capability and capacity. The second step will involve setting HR goals and objectives. This step of the 5 steps of strategic human resources management requires strategic alignment of the set goals with the organization's overall business goals.
There is a need to audit gaps such as skills and competencies required in the workforce. This creates an understanding of the current employees and how they contribute to fulfilling the desired goals and objectives.
When properly executed, this phase of the five steps of strategic human resource management will assist you in identifying obstacles and putting a plan of action into place to take advantage of opportunities and successfully counter threats.
3. Develop Strategic HR Objectives
Assessing the current situation and forecasting the needs and capabilities breathes into developing a sound HR strategy. The strategy should be clear and concise on how business goals tend to be achieved through HR. This is crucial. Research has found that companies with effective HR Strategies were 1.4 times more likely to succeed financially in the top quartile of their industry.
The strategic HR goals must be converted into precise targets that can be tracked and measured. These goals should be relevant, time-bound, detailed, measurable, feasible, and consistent with the company's broader business objectives.
4. Implement the HR Strategy
This step entails implementing HR policies, procedures, and programs to put the HR strategy into practice. It is critical to inform staff members about the HR plan and get their support.
This is a transition step. Dave Ulrich treats HR as a change agent at this phase, and as change agents, HR professionals will play a significate role in driving the desired strategy. According to Ulrich, as change agents, HR must possess good problem-solving, communication, and project management skills.
Successful implementation of the HR strategy yields positive results. A study by the World Economic Forum found that organizations successfully implementing HR Strategies were 2.5 times more likely to be innovative than those with weak HR strategies.
5. Monitoring and Evaluate the HR Strategy
The strategy should be monitored and evaluated for its effectiveness. The strategy should regularly be reviewed. This ensures the strategy remains aligned with the company's goals and objectives.
While monitoring the HR strategy's progress, it is essential to make adjustments as needed. The metrics used to monitor and evaluate the HR strategy will vary depending on the organization's goals and objectives.
Monitoring and evaluating performance will require HR to act as an administrative expert. Ulrich argues that when HR acts as an administrative expert, it focuses on delivering cost-effective and efficient services. This can be done through automation, standardization or outsourcing.
The above represents the 5 basic steps of strategic human resources management. Further research will reveal that several factors can be considered for strategic human resources management. These could include the corporate culture and the budget to see through the implementation of strategic human resources. However, these 5 steps of strategic human resources lay a good foundation for helping the organization achieve its goals.
The Ulrich Model has been praised for its success in assisting organizations to coordinate their HR practices with strategic objectives. However, some critics contend that the approach is overly complex and does not offer enough direction for HR professionals.
The HR Magazine contends that the model relies on a clear and stable organizational strategy that may not exist or change frequently in today's volatile and uncertain environment. The authors believe the model does not fully consider the impact of automation and technology.
A publication by the Havard Business Review suggests that Ulrich's model does not address the competencies and capabilities required for HR professionals to perform their roles effectively and add value to the organization. For instance, some HR personnel may lack the skill to act as strategic partners or change agents. These skills could include analytical thinking and business acumen.
Some HR professionals could also lack the drive or dedication to carry out their duties, particularly if they are not recognized or compensated for their services.
Tips for strategic human resources management
- Get buy-in from senior management: Strategic human resources management requires support from senior management. There is a need to have this buy-in before embarking on this journey.
- Involve employees: Employees are an integral part of strategic human resources management. Their input is essential for strategic human resources management. They need to be involved in the planning process and ensure they understand the organization's desired outcomes.
- Be flexible: strategic human resources management must be adaptable enough to keep up with the ever-changing business environment. Always stay ready to make adjustments when necessary.
- Be proactive: Instead of solving problems that have already occurred, identify and address workforce needs that are anticipated.
The success of organizations depends heavily on the 5 steps of strategic human resources management. Organizations can develop a strategic human resources management plan that will assist them in achieving their objectives and long-term success by following the 5 steps of strategic human resources management mentioned above.
Brandon Murambinda is an Organisational Design and Development Consultant at Industrial Psychology Consultants (Pvt) Ltd, a management and human resources consulting firm.