What is Strategic Human Resource Management (SHRM)?
Strategic Human Resource Management, abbreviated as SHRM is all about linking the issues of human resource management to the organization’s overall strategies, in order to incorporate those policies in the company’s strategies, as well as to reinforce or change the culture of the organization.
This involves the incorporation of human resource management issues into the strategic plans of the organization and obtaining the acceptance and insertion of a human resource management view in the organization’s strategic decision-making process.
In this way, we can say that strategic human resource management is a managerial process wherein human resource policies and practices are attached to the strategic objective of the organization. It is mainly related to integration and adaptation. It makes certain that:
- Human Resource Management is fully integrated with strategy and the firm’s strategic needs.
- The policies of human resource coincide both across policy areas and across levels.
- Line managers and employees, adjust, accept and use human resource practices, as a part of their day to day work.
Strategic Human Resource Management is a process that entails the formulation of human resource strategies that are vertically integrated with the business strategy and horizontally integrated with each other. It tackles the issues of human resource that can affect or be affected by the strategic plans of the enterprise.
SHRM is concerned with two types of Fit – Vertical Fit and Horizontal Fit:
- Vertical Fit: It is related to the integration of human resource management with that of strategic management processes.
- Horizontal Fit: It is related to integration at the same level, it can be of two types:
- Internal Fit: It is related to the integration amidst various human resource management subsystems like recruitment, compensation and training.
- External Fit: It is related to the integration amidst human resource management and different functional areas of the business like marketing, finance, production, purchase, research and development, operations etc.
Characteristics of Strategic Human Resource Management
SHRM is characterised by:
- Long Term Focus: Strategic Human Resource Management has a long-range focus, as the business plans and strategies are devised for more than a year and so they are long-term oriented.
- Relation between Human Resource and strategy process: SHRM entails outright linking of human resource outcomes with that of organizational outcomes so as to gain excellence. Excellence is nothing but the development of skills in terms of ideas, innovations and inventions, so as to gain a competitive advantage.
- Effective Performance: SHRM policies results in performance benefits that can be measured and quantified. It lets the introduction of corrective measures, to lessen gaps.
- Fosters Corporate Excellence Skills: Strategic human resource management helps in learning new skills like creative insight, sensitivity, vision, versatility, focus, patience, etc.
- Focuses on customers both internal and external customers: External customers are the ones who purchase goods and services of the company and pays consideration for it. From the SHRM point of view, internal customers are the employees who use the services of the human resource department and in turn, help to create offerings for the external customers. Therefore, satisfied internal customers help in satisfying external customers.
- Elevates status of HR function: SHRM means the human resource executives remain that the centre of the organization. It has also been argued that the status of human resource managers has improved and it has been viewed as an important part of the organization. In many corporate houses, the head of the HR department sits with the company’s board. So, it has resulted in the elevation of the status of human resource.
Functions of Strategic Human Resource Management (SHRM)
The basic functions of strategic human resource management are given as under:
1. Establishing High-Performance HR Management Practices: Strategic human resource management makes certain that there is a coherence between the overall business strategy and human resource strategy for exceptional organizational performance and competitiveness.
2. Reengineering Organization: SHRM stresses the significant role of organizational design for higher work autonomy as well as condensation of tasks. It entails smoothened hierarchy, decentralized structure, facilitating information technology, strategic leadership and HR practices, which enables the work structure more conforming to the goals and culture of the organization.
3. Developing Transformational Leadership: It involves the development of an organization’s human ability, encourages commitment, flexibility, innovation and change.
4. Establishing Workplace Learning: SHRM gives preference to work-related learning, both formally and informally, so as to achieve commitment, credibility and quality of human resources. Learning is pivotal to reinforce an organization’s core competencies.
5. Assessing HR Effectiveness: AS SHRM takes human resources issues as strategic issues, so, it seeks to locate the strategic human resource needs so as to support business strategy to check whether human resource possesses the major competencies which are required to partner strategically with both internal and external customers.
Hence it calls for various tools and techniques so as to identify human resource priorities, developing and implementing business solutions that are human resource-oriented and evaluate outcomes and their impact on business. So, it demands constant reengineering of HR processes.
In a nutshell, Strategic Human Resource Management is a practice of managing human resources that assists long term business objectives and outcomes. For the purpose of attaining the goals of the organisation, it constantly interacts with other departments.