Key Steps to Strategic Human Resource Management

What is Strategic Human Resource Management?

Strategic human resource management, regularly abbreviated as SHRM, is defined as the connection between a business's human resources and its objectives and strategies. SHRM emerged as a result of changes in human resource priorities and objectives.

Previously, human resource management was an administrative function focused on daily business operations. Modern-day strategic human resource management focuses on bridging the gap between your human resource department and overall business strategy in order to gain a competitive advantage and meet customer needs.

With SHRM, your human resources department does not work within a silo. Instead, HR activities focus on collaborating with other departments to meet needs and objectives.

Your entire business benefits when departments work collaboratively and utilize available resources more efficiently. Various benefits of human resourcestrategic planning include-

1. Productivity- Maximizing the efficiency, productivity, and effectiveness of available human capital increases bottom line profitability and decreases unnecessary labor costs. The planning process anticipates any costly disruptions and keeps business operations running smoothly.

2. Employee engagement- Your entire organizational culture is optimized with proper strategic human resource management. Employee engagement levels are increased when each team member understands how they can best contribute to short and long term company objectives.

Employee retention rates improve when employee engagement rates are higher. Retaining top talent employees grants your business a competitive advantage and company culture boost.

3. Management improvements- SHRM presents business leaders with the tools needed to utilize available and incoming human capital for business objectives. Managers and other senior professionals can utilize SHRM to onboard, train, and develop employees most effectively.

As a result, strategic HRM builds better employee relations between managers and their team members.

4. Customer satisfaction- Customer satisfaction rates are increased when everyone in the business is working towards a common business strategy and universal objectives. When employees are more engaged and satisfied with their roles, they provide better customer service to your client base.

7 Steps to Practicing Strategic Human Resource Management

7 strategic human resource management best practices include-

  1. Understanding your business's short and long term objectives before developing your human resource strategy.

  2. Evaluating employees individually and thoroughly in order to identify their personal business goals and areas of expertise. Although the traditional performance appraisal model is useful for performance management and strategic planning initiatives, many HR managers elect to undertake more frequent and informal evaluations of their team members.

  3. Performing a comprehensive analysis of your current human capital and collaborating with senior management to strategize how each employee can best contribute to company objectives.

  4. Forecasting business needs, carefully considering supply and demand. While demand forecasts what skills and employees are needed for future business operations, supply evaluates the currently accessible skills of existing employees.

    Proper forecasting necessitates an analysis of how current employees are being utilized as well as what adjustments or additions are required to optimize your business's longevity, success, and profitability.

  5. Investing and implementing the technological tools needed for your employees to succeed in their roles.

  6. Carrying out your strategic plan to develop existing personnel and onboard required talent. HR professionals should craft job descriptions based on desired skills and expertise.

    After screening and interviewing candidates, hire the most appropriate employee for the role. Outstanding onboarding and training programs must be used to provide employees with a competitive advantage and appropriate company culture acclimation.

    Keep in mind that the onboarding process is crucial for long term employee retention and employee relations establishment.

  7. Consistently utilizing a standardized performance appraisal to ensure strategic planning objectives are being met. Undertake corrective action whenever there is a failure to meet needs or objectives.


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  • Strategic human resources management is defined as the connection between a business's human resources and a company's objectives, strategies, and goals. Proper human capital resources management and formulating a strategic approach to achieving business objectives are foundations of SHRM.
  • Whereas previously the HR department was focused on administrative tasks and daily business operations, strategic HR management focuses on the collaboration between departments towards a common business strategy and established shared objectives.
  • SHRM promotes a competitive advantage by improving overall business performance with innovative collaboration and strategic planning. Available human capital is best utilized while needed skills can be sourced through hiring new talent.
  • Employee engagement rates are positively influenced by SHRM especially when performance appraisal and performance management best practices are adequately utilized. When employees understand their specific roles, how their role contributes to accomplishing overall business goals, and how their skills are being optimally utilized, they are much more engaged.
  • Higher employee engagement rates directly correlate with increased employee retention and job satisfaction levels. Organizational culture and company culture are additionally benefitted from improved employee relations and retention.

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