What is Strategic Human Resource Management (SHRM) in 2023?
Workhuman Editorial Team
9 min read
Human resource development (HRD) is the process of managing and improving the workforce in any organization. HRD encompasses training, retention, and development of human capital. Its main objective is to maximize employees' productivity by focusing on their skills and abilities.
However, focusing solely on your employees' affairs without considering the bigger picture —namely your organization's goals— could leave you wanting. Hence, you’ll need to get strategic.
In this guide, I’ll tell you everything you need to know about strategic human resource management (SHRM). We'll start with the basics and move into the deeper aspects of human resource development.
Let’s begin!
What is Strategic Human Resource Management?
Strategic human resource management (SHRM) can be defined as the process of managing people in a way that optimizes the business's goals and objectives.
Basically, strategic HRM is a process that helps companies align their HR activities with the broader business strategy and objectives.
It involves identifying and prioritizing the skills, competencies, and experiences needed for success in your organization. After that, it develops a plan on how to use those skills to push the company’s goals.
Now, there are three main approaches to SHRM that are used by organizations today.
These approaches are:
- Universalistic
- Contingency
- Configurational
Let’s take a closer look at what each approach entails.
1. The universalistic approach
The universalistic approach to HR management suggests that the best practices for most HR issues can be applied to all organizations equally.
To be honest, this approach isn’t the best out there. It’s based on the assumption that all employees are motivated by similar things and have similar expectations for their careers.
I’d argue that this approach is too simplistic and ignores the fact that people are different and will react differently even if they're in similar situations.
Not to mention the fact that this approach overlooks the goals and objectives of the organization itself. Unless you’re copying a company exactly like yours, you’ll need to put in some extra work to solve your HR problems.
2. The contingency approach
The contingency approach is the opposite of the universalistic approach to HR practices and problems.
In fact, it highlights the necessity for HR approaches to be arranged into a comprehensive and wide-ranging set of organizational policies.
This approach argues that there is no one-size-fits-all approach to human resource issues; rather, it emphasizes that HR policies should be tailored to meet the specific needs of individual organizations in order to be effective.
This means that there’s no single best way of organizing work or managing employees. Instead, organizations should consider their own culture and environment when developing policies.
3. The configurational approach
Finally, we have the configurational Approach. This is what I like to call the “best of both worlds” approach because it combines the strengths of both the universalistic and contingency approaches.
The configurational approach to SHRM emphasizes the need for HR policies that are contingent on organizational circumstances.
However, it also acknowledges that policies must be flexible enough to fit the organization's general strategy.
In order to understand how this works, let's look at an example: You’re a restaurant owner in the middle of a big city.
You need to hire staff and train them so that your customers can get served quickly and efficiently. Plus, you need to make sure that your staff members get along well enough with each other, so they can work together effectively.
A universalistic approach would suggest creating a set of job descriptions and training programs that could be used across all restaurants without modification.
However, this may not work well for your restaurant because your employees will need specialized training based on your kitchen layout.
A contingency approach would suggest creating different sets of job descriptions and training programs depending on your needs. Sadly, this may take way too long.
To make sure your restaurant’s core values don’t clash with those of other establishments, you’ll need to develop a strategic plan with your HR management.
As you can tell, the configurational approach, unlike the previous ones, allows for a more holistic view of HRM.
The difference between HRM and SHRM
Human resource management (HRM) is the process of managing the employment and workplace relations between employees and employers.
It's a complicated job that involves a lot of different responsibilities, such as recruiting and training new employees. Plus, making sure they’re equipped with the right skills and helping them understand how they fit into the company's overall mission.
Strategic human resource management (SHRM) takes it one step further. Rather than simply focusing on day-to-day operations, SHRM focuses on long-term growth for both the company and its employees.
This means taking a look at how well your organization is functioning from a strategic perspective. For example, how it's doing against its goals, how much it's growing over time, and what problems are keeping it from growing.
After analyzing, you can make adjustments so that you can continue making progress toward your goals over time.
Compared to regular HRM, SHRM is there to help you reach your business goals and give you a competitive advantage.
The benefits of implementing SHRM
Once you start strategizing and planning your HRM, your organization will reap numerous benefits. These benefits include:
1. Increased productivity
HR management is a crucial part of any company's success. When you have the right people on your team, the sky’s the limit! That’s why human capital is a key component of any organization's success.
Investing in your employees, especially by implementing strategic HR management, can lead to higher work productivity and employee satisfaction.
When you invest in strategic human resource management, you're investing in your employees' well-being and happiness at work.
And when employees are happy doing their job, they're more likely to perform better and put extra effort into their work.
Thus, better results for everyone involved!
2. It makes change less stressful
SHRM is a tool that can help reduce the stress of unfavorable conditions in the workplace. For example, when you're facing a change, it's important to have a plan in place that’ll help you deal with it.
For instance, when the world halted in 2020 with the pandemic, many companies had to close down for multiple reasons—one of which was that they didn’t have a plan for dealing with the crisis.
Thankfully, with strategic HR management, you can anticipate and respond quickly to changes in your workplace environment.
For example, you'll be able to:
- Identify what changes are coming
- Create plans for dealing with those changes
- Train employees on how they can best handle the changes
- Identify any gaps in your strategy so that you can fill them
Hopefully, in the end, your company will never be caught off guard!
3. Identify weaknesses and strengths in the workplace
When you’re leading a team, it’s a good idea to know what everyone’s best strengths are—so that when the time comes for them to step up and deliver, they can do so well.
You also need to know what they're best at so that you can make sure they’re working within those boundaries, not exceeding them unnecessarily.
For example, there are certain skills that your employees have that aren’t required for their current position but could be useful in other roles within the company.
Identifying these strengths will help guide future hiring and promotional decisions so that those qualities can be taken advantage of as much as possible.
7 easy steps to a successful HR management strategy
SHRM is all about making sure your organization is set up to succeed. It's a process of building and maintaining a workforce that helps your business thrive so you can achieve your goals.
This handy little guide here will help you understand some of the steps involved in SHRM—steps that’ll ensure your organization has what it takes to get where it needs to go!
1. Understand your company’s goals thoroughly
The best way to create a winning HR strategy is to learn everything you can about your company’s objectives.
When you understand what your company is trying to accomplish in the long term, you can figure out how best to contribute to that end goal.
For instance, if your organization's goal is to increase sales by a certain percentage, it makes sense for employees to focus on finding ways to improve sales.
Maybe they come up with a new strategy that increases customer retention, or maybe find a way to let customers pay more easily online.
2. Assess your HR capabilities
It's true that assessing your HR capabilities can help you build a better SHR management plan. As you assess your HR capabilities, you're able to identify where your organization is strong and where it needs improvement.
You can then use this knowledge to address the gaps in your SHRM plan by developing strategies that’ll fill those gaps.
For instance, you may that your organization has a lot of experience with using recruitment software, but not much knowledge about how to use it effectively.
As a result, you might want to consider hiring an expert who can help train everyone else on how to use the software more effectively.
3. Use your current HR capacity to help reach your goals
There are a lot of ways you can use your current HR capacity to help reach your goals and build a better future for your company.
First, it's important to know what your current state is so that you can set a baseline for future progress.
You should start by assessing the effectiveness of your current practices, as well as the extent to which they're being implemented at each level.
Do you have any issues with training or communication? Are there problems with discipline? Do employees feel like they're being listened to?
Once you've figured out how things are currently working, you can use that information to figure out where improvements need to be made.
This will also help you determine what resources might be necessary for making those improvements happen.
For example, if training is lacking, you'll want to invest in timely and relevant training materials for employees (and managers).
4. Figure out your future HR requirements
It's difficult to predict what your HR needs will be in the future, but it's crucial to have a plan for managing your company's human resources.
A lot of organizations don't just want to know how many people they'll need to hire in the future—they want to know how many people they'll need to keep.
This is because there are a lot of ways that an employee can leave the company, and not all of them are good!
That's why calculating your future HR requirements can help you build a better SHR management plan.
It gives you more information about what kinds of things might happen in the future and what kinds of things might not happen at all. In the end, you’ll come out on top.
5. Find out what tools the workplace needs
Knowing what tools employees need for their jobs can help you build a better SHR management plan. Why?
Because When you have a clear picture of what tools your employees need to do their jobs, you can set more realistic goals for your plan.
For example, if you know that employees will need access to certain applications in order to complete tasks, then you can plan for training on those applications.
Or if you know that some employees are going to need laptops in order to do their work, then you can budget for them.
Knowing what tools employees need also gives you a clearer idea of which types of careers they might be interested in pursuing as well.
For instance, if some employees need laptops and others need desktops, then this could affect whether either group is interested in working remotely or not.
6. Plan and implement your new strategies
Before you start implementing the new strategies, ask yourself some questions:
- What do you want from this new strategy?
- How will it benefit your company?
- Will it grow your business in a way that makes sense for the long term?
- Will it help you reach your goals?
- What could affect this plan?
It’s important to monitor everything in the workplace when you’re trying to implement something new. If you feel that everything is clear to you and you have the right answers, then it’s time to get started!
7. Evaluate and improve
It's vital to evaluate performance in any HR department because if you don't know how your employees are doing, you simply can't improve.
A strategic HR management review is a great way to track the progress made and identify areas for improvement.
By conducting this review, you can see how your company has progressed in terms of employee satisfaction. You can also take a look at what measures have been taken to improve the workplace environment and how they’ve affected employees.
These reviews allow businesses to get an objective view of their progress, which is especially important if they’re looking to expand or change direction in any way.
As such, it's important to allow your HR professional to set a schedule for performing these reviews on a regular basis.
Examples of SHRM
In a world where your employees are the most important asset, how do you know if your company is truly making the best use of them?
To get a sense of what that would look like, let's look at some major companies and see how they're putting strategic thinking into their HR management.
1. Google
Google is known for its data-driven approach to business. They constantly look at how they can use data to make better decisions, and their HR department is no exception.
In the early 2000s, the co-founders decided that they wanted to take a scientific approach to human resources that relied on feedback from their employees.
This led them to create Project Oxygen, which studies management practices and helps organizations foster the best ones.
They identified eight common behaviors exhibited by the top-performing managers, and then they trained the rest of the management staff to emulate them.
Over time, Google saw a reduction in turnover, an improvement in performance, and increased employee satisfaction.
2. Hilton Worldwide Holdings
Hilton Worldwide Holdings is dedicated to being the world's most hospitable and trusted hospitality brand. A key component of its strategy is to develop and retain a skilled workforce by leveraging effective HRM practices.
The company uses a “Balanced Scorecard” as a strategic approach to HRM to make sure that its HR management policies align with its mission and goals.
Moreover, Hilton used another approach known as “The Team Member Survey” to collect feedback from its employees. This strategy aims to uncover what makes the company a great place to work, and how it can better serve its customers.
As you can see, these two approaches helped them become as successful as they are today.
Frequently asked questions
Now that you’ve learned all that you need about SHRM, let’s take a look at some common questions.
Why is strategic human resource management important?
Strategic Human Resource Management is important because it allows you to make the best decisions for your company.
It helps you put together a team that will execute your visions and goals and helps make sure that you have happy and productive employees.
What are the 5 human resources roles?
If you're wondering about the five main roles in any HR department, here they are:
- Talent management
- Compensation and employee benefits
- Training and development
- Compliance
- Workplace safety
These are all areas that need to be addressed for a successful business.
What are the 3 approaches to SHRM?
As I stated earlier, the three approaches to SHRM are the universalistic, contingency, and configurational approaches.
The universalistic approach assumes that a single best practice for SHRM exists for all organizations. The contingency approach recognizes that different situations require different approaches to SHRM.
Finally, the configurational approach focuses on how different aspects of an organization work together to create an effective SHRM strategy.
Wrap Up
The overall goal of strategic human resource management is to align the organization's mission, vision, and values with its business strategies and objectives.
Achieving this alignment allows organizations to create an environment that facilitates employee engagement, productivity, and innovation.
In the end, there are a lot of strategic considerations when it comes to HR management. The most important thing to remember is that if you want to be successful, you have to be consistent.
You can't just do something right once—you have to do it every day! And if you do that, the rest will fall into place.
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