What is Strategic Human Resource Management?

Strategic human resource management is a process that helps the human resources department maximize the potential of its workforce through strategic planning, talent management, leadership development, organizational design, and performance management.

In the past, strategic HR management was an administrative function. Today, HR managers play a critical role in ensuring that the organization has the right people that help improve business performance and ensure that it delivers on its mission.

It means that HR professionals need to understand its goals and objectives. How they can best help the organization achieve those goals, and what actions will allow them to do so. This article will help you better understand what strategic human resource management is and how a smart plan can bring tremendous value to the organization.

If you’re interested in learning more via video, then watch below. Otherwise, skip ahead.

What are Strategic HR Management Goals?

Strategic human resource management involves developing and implementing strategies for attracting, retaining, motivating, and managing talented individuals who contribute to the organization’s success. HRM also includes policies and practices designed to ensure fairness in employment relations.

Strategic human resource management aims to achieve a competitive advantage by creating value for customers, shareholders, employees, and other stakeholders. The term “strategy” refers to the organization’s overall plan of action to create value. It is not just one thing; it is a combination of many things, including:

• Actions are taken by the organization to meet customer needs
• Policies and procedures used to manage the organization
• Processes used to produce goods or services
• Marketing activities used to sell products and services
• Financial decisions made to fund operations
• Organizational structure
• The technology used to support business processes
• People-related issues such as recruitment, selection, training, compensation, benefits, and performance management
• Legal requirements and regulations affecting the organization

How Can Businesses Benefit from HR Strategic Planning?

Businesses benefit from strategic human resources management because it allows human resource departments to make better decisions. For example, companies can develop plans to improve productivity, reduce costs, increase profits, and enhance employee satisfaction. The sales and HR departments play a role in determining whether the company should expand into new markets, acquire another company, or merge with another business.

If you want your business to grow, you must first understand where it stands before developing a plan. Also, you must know your strengths and weaknesses and then work towards improving both. You must also identify opportunities to create new products or services.

If you want to attract more customers, understand what your target market wants and how you can provide it. It would be best if you also decided which marketing methods would work best.

To retain current customers, you must first find out why they buy from you instead of competitors. Then you must figure out ways to keep them satisfied. You may even wish to consider offering discounts or gifts to reward loyal customers.

You must also think about motivating your employees to perform well and stay productive. If you want to hire more qualified candidates, you must first understand the qualities you are looking for in potential hires. You must also decide if you’re going to use job descriptions or conduct interviews when hiring.

Once you have determined your priorities, you can begin to implement changes to improve results.

Strategic Human Resources Management Benefits

Strategic HR involves careful consideration and analysis. Due to that, here are specific benefits of human resource strategic planning for businesses:

1. Identify areas of weakness and strengths
2. Develop strategies to address these weaknesses and strengths
3. Establish sub-goals and objectives to measure progress toward the end goal
4. Make sure there is alignment between business strategy and human resources strategy
5. Ensure that all aspects of the organization revolve around the same set of goals and objectives
6. Create a culture of continuous improvement
7. Evaluate the effectiveness of programs and policies
8. Increased job satisfaction
9. Employee retention

Check our certified HR courses if you want to learn more about developing and implementing a strategic HR management plan. Master HR management and how to get the best out of your employees.

7 Steps to Creating a Strategic HR Plan

One of the main functions of HR is to provide an effective organization’s workforce management. It includes operational and strategic management and developing a plan that helps employees evolve. To do this, you need to start by determining the purpose of your human resource strategy.

Next, you need to look at the organizational structure of your company. How many levels are there? Do you have a different human resources department within each class? Are some divisions larger than others?

Some of the target outcomes for human resources planning include the following:

• Increase profitability through a strategic HR planning process
• Improve customer service
• Enhance employee morale and motivation
• Provide training and development opportunities
• Reduce turnover rates
• Maintain high-quality standards

Once you have these outcomes in mind, you can follow the following steps in developing a strategic HR department.

1. Define Goals

Defining goals helps you focus on a more strategic human resource management strategy. It gives you direction and provides a framework for measuring success. A goal is an objective you hope to achieve within a specific time frame. It’s something you want to accomplish. A plan is usually quantifiable. For example, you might say, “I want to increase my sales revenue by 20% to achieve a competitive advantage.”

Goals break down into sub-goals. The intermediate goals help you reach the ultimate goal. Additionally, they provide milestones in the strategic HR planning process. For example, if your ultimate goal is to increase sales revenue by 20%, then your intermediate goals can be:

• Achieve a 5% increase in sales revenue over last year.
• Achieve a 10% increase in sales revenue from January to June.
• Achieve a 15% increase in sales revenue during July.

It’s also essential to develop a SWOT analysis when defining your strategic HRM goals. The SWOT analysis helps identify any potential threats or obstacles that may hinder organizational success.

When conducting a SWOT analysis of your HR strategy, consider the following questions:

• What are your strengths?
• What are your weaknesses?
• Where are your opportunities?
• What are your threats?

Answering these questions will help you define business goals and improve business performance.

2. Determine Objectives

Objectives are measurable actions you take to meet your goals. They are how you achieve your goals.

Your objectives should be realistic. They should not be too ambitious. If they are too complicated, you may fail. You also don’t want them to be so easy that you will never succeed.

You should have a working strategic human resource management process to define specific human resource objectives for your business. Some examples include:

• Increase the number of new hires by 50%.
• Increase the average length of employment by three months.
• Reduce the percentage of employees who leave their jobs by 25%.
• Eliminate the use of temporary workers.
• Increase the number and proportion of women in management positions.
• Increase the proportion of senior managers with MBA degrees.

Your HR objectives should align with your overall company objectives. For example, if your company wants to increase its market share, setting up similar goals makes sense. Additionally, you should align all your HR objectives to your company’s financial objectives.

Keep in mind that the more tangible your objectives are, the easier it will be to measure progress.

3. Create Strategies

Strategic human resource management is all about the strategies you intend to use to achieve your objectives. They are the methods you’ll use to get there. There are many different strategies available. However, there are three main types.

• Change Strategy – This involves changing the current status quo or making changes that are already underway.
• Reinforcement Strategy – Involves reinforcing existing practices and policies.
• Innovation Strategy – Introduces new ideas and processes.

Your organization’s strengths and weaknesses are the foundation for your strategic human resource management. There isn’t a single best tactic. Instead, the best strategy depends on the situation.

4. Develop Tactics

Develop HR techniques you’ll use to implement your strategies. There are two kinds of tactics:

• Direct Tactics – These involve implementing your strategies immediately. Examples include hiring additional staff, promoting more people, giving raises to employees, and employee retention strategies.
• Indirect Tactics – These involve using other resources to support your strategies. Examples include advertising, training, outsourcing services, etc.

When developing strategic human resource management tactics, think about the results you expect from each tactic. Do you need immediate results? Or can you wait until later? How much money will you need? How much time do you have before you need to start seeing results?

It would be best to keep in mind that you can only do what you have authority over. So, if you’re trying to promote employees but they report directly to someone else, you won’t be able to do anything about it.

5. Plan Implementation

Planning is determining when, where, and how to execute each tactic. Planning includes deciding whether to act now, wait until later, or do nothing.

While implementing, it’s essential to closely monitor different factors that may affect the composition of a workplace. These factors include:

• Age – Older employees tend to have more significant experience than younger ones. Younger employees are usually less experienced. It can be hard to find good talent among young people.
• Gender – Women typically make up about half of the workforce. Men generally make up the rest. Companies with a higher proportion of female employees tend to have better performance.
• Race – People of color tend to earn lower salaries than white men. In addition, they are less likely to receive promotions.

6. Monitor Performance

Monitoring results is the process of evaluating what has happened after implementation. Monitoring includes measuring performance against pre-determined benchmarks. It also includes assessing the impact of any changes made by strategic HR management to improve effectiveness.

Monitoring performance is an ongoing activity. It requires constant attention. Monitoring helps determine what works and what doesn’t.

There are several tools you can use, including:

• Surveys
• Interviews
• Observation

7. Evaluate Performance

Evaluating performance is critical in any HR department. It is the process of comparing actual results to expected outcomes. Evaluation can be done by analyzing data collected through monitoring and evaluation.

Evaluating your performance is crucial because it lets you know if your strategies are working. If not, then you need to change them. For example, if your HR strategies aren’t producing desired results, you might consider changing your approach, including outsourcing strategic human resource services.

Conclusion

Including strategic human resource management in the overall business strategy help with creating a productive environment, but it also helps with other crucial aspects such as retaining employees.

If the human resource department succeeds in creating an effective strategy, it brings value to the organization.

Take time to create the human resource management strategy. Having the right plan creates a streamlined process that’s easy to follow. Good luck.

If you are new to human resources and are looking to break into an HR role, we recommend taking our HR Certification Courses, where you will learn how to build your skillset in human resources, build your human resources network, craft a great HR resume, and create a successful job search strategy.

Josh Fechter

Josh Fechter is the founder of HR.University. He's a certified HR professional and has managed global teams across 5 different continents including their benefits and payroll. You can connect with him on LinkedIn here.