Introduction

Values and culture form the foundation of a company; they play a crucial role in the success of a business and ultimately influence its employees’ growth. According to IBM’s study, 71% of CEOs believe that human capital is critical to sustained economic value. This makes it vital for any organization to prioritize its human capital requirements and create a conducive environment to attract and retain the right talent. Here’s where strategic Human Resource Management comes into the picture.

If you’re wondering what is strategic Human Resource Management (HRM) and its implementation in organizations, this article will answer all your queries. 

What is strategic HRM?

The Strategic Human Resource Management definition is nothing but the connection between a company’s human capital and its overall ethos. An excellent strategic Human Resources Management process enables the company to create a strong alignment for its employees with its values, strategies, and overall goals. It aims to provide:

  • A purpose that fits into the organizational culture
  • A workplace that incorporates flexibility, innovation and empowers its team to grow better in their role
  • Improved business performance by enabling its Human Resource strategy to create the right opportunities and rewards based on performance

To incorporate strategies of HRM in your organization, you must first start by empowering the Human Resource team. Strategic HR is crucial to the HRM process because HR is not only the strategic partner of an organization but also creates and enacts policies to successfully manage activities, including training, hiring, rewarding, and maintaining employee satisfaction. A strategic HR team focuses on acquiring and retaining employees and implies a long-term vision to address any crop issues. Involving HR in the company’s long-term vision and strategy enables the team to plan its activities appropriately, and this percolates to each department and team member.

Now that you are familiar with the meaning of strategic Human Resource Management, let’s delve into understanding its implementation: 

A 9-step strategic approach to HRM:

  1. Create Awareness
  2. Formulate Organizational Goals
  3. Analyze The External Factors That May Affect Your Business
  4. Analyze The Internal Environment And Resources
  5. Identify The Risks And Strategic Opportunities
  6. Perform A Gap Analysis
  7. Develop Alternative Strategies
  8. Implement A Strategic HRM
  9. Measure & Control Processes

Companies that focus on implementing and enacting strategic Human Resource Management are more likely to succeed with a conducive work environment that empowers and promotes the correct values. These companies effectively see:

  • Increase in job satisfaction levels of its employees
  • Better work culture and collaborative rather than competitive environment
  • Proactive employees who are always aligned with the organizational vision
  • Clarity in enacting the right actions
  • Higher productivity and improved customer satisfaction

To effectively apply strategic Human Resource Management, organizations need to create a strategic HR planning process. The following 9-step process outlines the steps required for strategic Human Resource planning:

1. Create Awareness

The first step in the strategic HRM process is to analyze the current organizational goals and objectives or start afresh by building them from scratch. Creating awareness about your organizational goals and strategies begins by interacting with each department and helping them understand their contribution to the overall mission. In this stage, the strategic HR must set expectations and manage stakeholders to ensure each department and leader is aware of the goals and culture.

2. Formulate Organizational Goals

Step two in strategic Human Resource Management is to formulate and plan organizational goals and objectives. This step is critical as it outlines what the organization wants to achieve in the future. It must span over expectations, existing promises, the mission or purpose, a 5-year roadmap, and strategies to achieve it.

In this step, values and culture play a key role; they must be in sync with the mission statement and strategy. If managers or leaders have differences in their attitude or expectations, internal conflicts may not be desirable. Thus, it is imperative to communicate the values and mission of the organization with all. 

3. Analyze The External Factors That May Affect Your Business

Once organizational goals get finalized, it is time to understand the several factors that may impact the objective. First, start by analyzing the external factors that may affect the business. Understanding the current risks and factoring them into overall goals helps create a realistic and achievable business strategy. 

The external factors that you must analyze are:

  1. Current demands and expectations
  2. Future expectations from your organization’s products or services
  3. Competitive analysis
  4. Industry trends

4. Analyze The Internal Environment And Resources

The understanding of internal resources and processes defines strategic Human Resource Management. Evaluating an organization’s current capabilities enables HR to understand its present and future requirements, including resources and other allocations. With such insights, they can create an actionable plan for the organization. 

The internal analysis also involves communication with teams on creating team goals that align with the overall organizational objectives. This step helps the HR understand the internal risks and strategic opportunities that can be leveraged to achieve set objectives.

5. Identify The Risks And Strategic Opportunities

While internal and external analysis helps understand and prepare for risks that may arise, risk analysis is different altogether. Identifying risks and strategic opportunities help create an ideal and agile Human Resource strategy tailored to its need. Use the findings from the internal and external analysis to help in this stage.

With the help of other leaders in the organization, a strategic HR should identify risks and opportunities that need to be considered for effective strategic planning. Managers should contribute to charting a strategic plan that is likely to succeed and mitigate any factors that may derail the organization from its future goals.

6. Perform A Gap Analysis

Once you’ve identified the risks and opportunities, the next step is to notice and highlight your strategy gaps. Gap analysis points out the strengths and weaknesses of the organization. This allows businesses to allocate their resources in an effective and optimum manner. 

7. Develop Alternative Strategies

Despite a thorough understanding of external risks, several problems are unforeseen, such as the Coronavirus pandemic. Most businesses failed to restrategize and realign their business to the new normal, mainly due to their inability to have perceived such a threat. A gap analysis highlights such issues and empowers you to create alternative strategies; organizations must always be prepared for the worst-case scenario.

Creating alternative strategies is all about ensuring the organization has a plan to adapt to its surroundings. The threats to organizations posed due to changing markets, financial inadequacies, high-speed modernization, or new technology’s emergence are equally unprecedented; a business must maintain a dynamic approach to overcome them. 

8. Implement A Strategic HRM

The success of strategic Human Resource Management depends equally on its implementation. After analysis and forecasting, it’s time to start implementing and educating current workers on the new strategy. To achieve the utmost benefits from your Human Resource Management strategy, you can:

  • Focus on hiring: Depending on the new requirements, start focusing on hiring resources with the future-ready skill-sets to help steer the organization from being agile and ready for future needs.
  • Revise onboarding and training to align with the new focus: Recreate onboarding and training processes to align with the new objectives and ensure that new hires understand the revised ethos. 
  • Organize training and gradually shift organizational values to the new culture: Training is an excellent option for moving existing employees’ thought processes to adopt new values.

9. Measure & Control Processes

Finally, once you’ve implemented a strategic HRM, measuring the success or tracking its progress is equally important. Create the necessary checks and evaluate progress periodically to help manage and control strategic Human Resource Management processes. 

Conclusion

Ready to implement strategic Human Resource Management for your organization? While these tips help in getting a high-level understanding of the subject, why not consider a deep-dive with an online instructor-led program in People Analytics & Digital HR? This 3-month program, in collaboration with IIM Indore, covers various strategic frameworks and teaches futuristic and imperative skills to aspirants and HR professionals who seek to become data-smart and industry-relevant. 

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