Strategic human resource management or SHRM is a branch of HRM. It emerged from the discipline of human resource management and is a fairly new field. Strategic HRM is defined as “the linking of human resources with strategic goals and objectives in order to improve business performance and develop organizational culture that foster innovation and competitive advantage.” SHRM in an organization means “to accept and involve the functions of HR as a strategic partner in formulating and implementing the company’s strategies through human resource activities which may involve recruiting, selecting, rewarding and training company personnel. In spite of the similarity in names, HRM and SHRM are two different practices; SHRM is basically a part of the complete HRM process. Besides that SHRM focuses more on long-term objectives rather than the in-house objectives with employees dealt by HRM. In the late 1980’s writers started stating strong opinions for a much more strategic approach to managing people than was the standard practice of that time. They clamored for the change of traditional management practices of industrial relations and people to the modern more improved ones.
The center point of SHRM is to address and solve problems that effect management programs centering on people in the long run and more than often globally. We can say that the main goal or objective of SHRM is to increase productivity not only in the employees but in the business overall, it achieves this by focusing on business problems and obstacles outside of the human resources range. SHRM identifies important human resource areas where strategies can be implied for the improvement of productivity and employee motivation. To achieve good results communication between human resource and top management of the organization is of utmost importance as cooperation is not possible without active participation.
Key features of SHRM
The key features of strategic human resource management are given below:[sky]
• Some organizing strategies or schemes link individual human resource interventions so that they are ‘mutually supportive’
• A great amount of responsibility is transferred down the line for the management of HR
• There is a precise link between overall organization strategy, organization environment, HR policies and practices.
Development in SHRM
In recent times HRM professionals have been facing challenges with employee participation, performance management, employee reward systems, high commitment work systems and human resource flow because of globalization. Traditional models and techniques have no place in today’s business world; also local companies which go global cannot use the same tactics in the global business world. Top managements and HR professionals that are involved in strategic human resource management face a wide range of issues which include some of the following:
• Rapid change in technology
• Introduction of new concepts of general management
• Globalization of market integration
• Increased competition, which may not necessarily be local
• Resultant corporate climates
• Constantly changing ownership
• Cross-cultural issues
• Economic gravity- shifting from developed to developing countries.
Strategic human resource management is crucial large as well as small companies. In small companies this process may be as simple as the manager or the owner himself taking time to observe employees, along with assisting, assessing and giving regular reviews. However larger companies will require a whole department to be in charge of such activities for the development of employees. The quality of staff members can be improved by meting their needs in such a way that it may benefit the company. Investing in employees and providing them with tools they need to thrive and prosper in the company proves to be a good investment in the long run for the company.
Purcell and Boxall argue that, “Strategic HRM is concerned with explaining how human resource management influences the performance of an organization.” They also point out that, “Strategy is not the same as strategic plans.” Strategic planning defines how things need to be done and it usually takes place in larger organizations in the form of a formal process. However, it is also true that strategy exists in all organizations regardless of their size; though it may not necessarily be written down or expressed. SHRM defines how the organization behaves and tries to cope with its business environment. Because strategic human resource management is based on human resource management principles it always incorporates the concepts of strategy; which proves that human resource management is actually a coherent approach to the management of workforce [people].
Business strategy and SHRM
[linkunit]All good business strategies, at least the ones which have a chance of succession are formed by “the people factor”. One of the main factors behind reporting human capital data and evaluation is the need for proper information; to be fed into the business strategy formation procedure. People have become the biggest asset in the majority of organizations. This requires for the skills, abilities and knowledge to be organized and implemented for maximum effect so that the organization may create value. The intangible value of organizations lies in the people that it employs. This value is being recognized by investors and accountants and in now generally accepted that it has signs of sustained performance in the long run. In this case it would be too simplistic to suggest that strategic human resource management is part of business strategy. In this case, the two must be mutually informative in the way people are motivated, managed, deployed and the availability of knowledge and skill should shape business strategy. It has now a regular occurrence to find strategic human resource management inextricably linked with and also incorporated into business strategies.
Strategic human resource management and human capital management [HCM]
Many writers have argued that HCM and SHRM is the same thing, and though the concept of the two strategies is quite similar, there are still some points that set the two apart. The following SHRM definition by Dyer and Holder shows three main features: “Organizational level – because strategies involve decisions about key goals, major policies and the allocation of resources they tend to be formulated at the top.” “Focus – strategies are business-driven and focus on organizational effectiveness; thus in this perspective people are viewed primarily as resources to be managed toward the achievement of strategic business goals.” “Framework – strategies by their very nature provide unifying frameworks which are at once broad, contingency-based and integrative. They incorporate a full complement of HR goals and activities designed specifically to fit extant environments and to be mutually reinforcing or synergistic.” This argument is based on the fact that both strategic human resource management and human capital management in their proper sense rest on the assumption that people are treated as assets rather than costs. It also assumes that both processes focus on the importance of taking on a mixed and strategic approach to the management of people, which is one of the main concerns of stakeholders in any organization.
The concept of human capital management strengthens and complements the concept of SHRM this concept is explained in the following definition by Dyer and Holder: “It draws attention to the significance of ‘management through measurement’, the aim being to establish a clear line of sight between HR interventions and organizational success providing guidance on what to measure, how to measure and how to report on the outcomes of measurement. It underlies the importance of using the measurements to prove that superior people management delivers superior results and to indicate the direction in which HR strategies need to go reinforcing attention on the need to base HRM strategies and processes on the requirement to create value through people and thus further the achievement of organizational goals defining the link between HRM and business strategy strengthening the HRM belief that people are assets rather than costs Emphasizing role of HR specialists as business partners.” For this reason it can be said that both SHRM and HCM can be regarded as important mechanisms in the process of managing people and also form the basis for the achievement of HCM advantage through a resourceful strategy.
Strategic human resource management takes on the main modern challenges which are faced by human resource management. This may include the following:
• Knowledge management
• Aligning human resource with core business strategies
• Demographic trends on employment as well as the labor market
• Integrating soft skills in human resource departments
[adsense1]So, strategic human resource management is designed to assist organizations to meet the needs of their employees in the best way they can so that company goals can be promoted. We can also say that SHRM is actually managing people proactively because it requires planning ways for an organization to meet the needs of its employees, thinking ahead, and also helping the employees to meet the needs of the organization. This process changes the outlook and affects the way things are done at a business site, in other words it helps to integrate modern ideas and models into the traditional human resource practices to come up with better solutions which not only benefit the employees but the organization. This is mainly a process where everything is improved, from the hiring of employees, to the training, assessment and discipline techniques used by the HRM department.