Strategic Human Resource Management (SHRM) can be defined as a link between human resources and the strategic goals and objectives of the business. Most importantly, the aim of that is to improve business performance and to develop an organizational culture that will foster innovation, flexibility and competitive advantage. In other words, the HR function is seen as a strategic partner helping the company to implement and formulate strategies as well as reach its goals and flourish. The main activities of HR department include selecting and recruiting the right people for the job roles, training and rewarding them.
Very often SHRM is being confused with HRM. SHRM has more of a long-term orientation towards objectives. It doesn’t focus on internal human resource issues; the attention is focused more on addressing and solving problems that have an effect on management programs in a long run. In other words, SHRM focuses on occurring obstacles outside of human resources and tires to increase employee productivity. Therefore the key actions of SHRM manager are to identify main HR areas where strategies could be implemented in the long run in order to improve overall employee motivation and productivity.
SHRM is implemented with an aid of strategies. As all the organisations are different so are the strategies but they set out the same idea – what the organisation intends to do about its human resource management policies and practices and how they should be integrated with the business strategy as well as each other. The strategies could be identified as being of two types: 1) high-performance working (overall strategies); and 2) strategies relating to the different aspects of HRM such as learning and development (specific strategies). A good HR strategy is the one that achieves what it sets to achieve and is satisfying business needs as well as employees.
Developing of HR strategies one of the key areas of SHRM. It can be a difficult task as there is no ‘right way’ of developing them. The process can even be just as important as the contents of the strategies. Furthermore, implementing HR strategies with the business strategies is also a very complicated process. The integration can be achieved in two ways:
- Vertical fit integration – integrating business and HR strategies. Vertical fit is about matching the HR measures with the strategy pursued by the company. In order to enhance an overall performance, the company needs to create or acquire the optimal package of human resources. Generally speaking, vertical fit is considered to be a critical step towards attaining the organisational goals with an aid of human resource activities.
- Horizontal fit integration – bundling. Horizontal fit refers to the congruence among the various HRM practices among themselves. There are three factors that influence horizontal fit: HR policy, options of HR policy, and the budget of HRM. In other words, horizontal fit is concerned about the composition and arrangement of the HRM system, and the organisational policies toward HRM matters in order to achieve a high level of fit among independent HR practices.
In brief, both types of fit make quite a significant contribution to the competitiveness of a business and it is important to arrange a variety of HR practices in a systematic way. If properly implemented, the set of these practices can have a very positive impact on company’s performance.
Implementation of HR strategies is not easy. First of all, they have to be ‘translated’ from abstractions into programmes that would clearly state objectives and deliverables. Even then the implementation is not easy, as there are other barriers obstructing it. Naming only a few, the barriers could be:
- Employees tendency to only accept initiatives relevant to their own areas;
- Long-serving employees tendency to cling to the status quo;
- Not all the employees understand complex or ambiguous initiatives or perceive them differently, especially in large, diverse organisations;
- The initiatives are sometimes seen as a threat;
- The extent to which senior management is trusted, etc.
These kind of barriers may occur when not enough attention is being paid to practical implementation problems. Here the role of a line manager is very important as well as the need to have established supporting processes for the initiative. In order to overcome these barriers it is essential to formulate the strategy well, make sure there is a support for the strategy, assess barriers, prepare action plans, etc. The main idea behind all that, however, is that there is a gap between what the strategy says and what actually happens to it in practice.
Challenges of Strategic Human Resource Management
It is important to identify what consequences SHRM has on the performance of business. In other words, as HRM is concerned with the people implications of the company, how can it change the vision of the organisations future and how can it help to fulfill the mission.
The key role of strategic HR management is already known and there are some issues that HR strategy may address:
- Structure. The success of the company depends a lot on whether there is a proper management structure in place.
- Team-working. By withdrawing old traditional hierarchies a background of creating a team building is created. In a lot of cases, the less layers there are between the workers and director there are, the more harmonized is the working environment. Also the communication between staff is easier and more effective. In addition to that, it could have far-reaching effects on flexibility and performance and to achieving a better coordination of business.
- Performance. This strategy is based on an analysis of the critical success factors and the performance levels reached in relation to them. The performance can be improved by taking the steps to improve training, development, reorganization, the development of performance management processes, business process re-engineering, etc. A lot of companies have already adopted performance management processes in which the emphasis is on performance improvement and development and not reward. This scheme brings new priorities of involvement, teamwork and self-development.
- Quality and customer care. The aim of most companies is to achieve the competitive advantage. The competitive advantage is often measured by customer satisfaction and hence loyalty and retention. Innovation and cost reduction is still important but the main focus of attention should be the customers because if they reject the product due to it not meeting their expectations then everything else looses the sense. Therefore the strategy for quality should be built into the business strategy.
Achieving a complete integration of HR and business strategies is quite complicated. Partly the reason for that is that in the past HR manager in the company was not considered to be a part of a general management team. Furthermore, the personnel advice was not a part of strategic direction. However, in today’s modern business HR is indispensable.