Strategic human resource management

strategic HRM

There are a number of career paths within SHRM. These include the human resource generalists, but also a growing number of specialists. Some of the specialties where the strategic human resources practitioner can contribute to the company's success are workforce planning, workforce development/onboarding, total rewards/compensation, labor and employee relations, training and risk management.

Organizations have begun to recognize that these specialized roles can be an important part in meeting the organization's strategic objectives. In the knowledge economy in particular, it is the skills, knowledge and experience of the employees that will often give a company its competitive advantage. Systems can be replicated by competitors fairly easily, but a superior workforce is much harder to duplicate. It begins with recruitment and onboarding, where finding the right candidates to execute the company's strategy is critical. Even with good people, they typically need to be trained. Then the company needs to get them working on the right jobs -- so job descriptions that align with not only corporate objectives but with the performance measures that motivate workers to meet those objectives. Furthermore, HR plays a critical role in retaining and promoting the best people, to make the best use of the assets in place.

There are good examples of companies that have distinctive approaches to SRM that have helped them succeed. Costco's low turnover approach has made its operations some of the most efficient around. Google's quest to find the brightest people has it one of the most innovative companies. Other companies seek to find the best workers at the low end of the wage scale, almost a tougher challenge. All companies can benefit from using human resources to gain competitive advantage.

There are a number of career paths within human resource management (HRM). Knowing this, the HRM professional can make a contribution to their organization in a number of different ways, because organizations gain different benefits from their strategic human resources departments. The strategic element to HRM is a relatively recent development, but increasingly in the knowledge economy organizations see the strategic benefits of an effective HRM strategy. This paper will explain how.

HRM consists of many different functions, and the roles for these functions within the modern organization are evolving. One can still find a home as a human resources generalist, especially in smaller companies where there isn't the budget for a large human resources department full of specialists. However, specialization is a key element of strategic human resource management because it provides an opportunity for organizations to dedicate the resources they need to each task individually. Some of the different career paths within strategic HRM are workforce planning, workforce development/onboarding, total rewards/compensation, labor and employee relations, training, risk management and more (SRHM, 2014).

Organizations have begun to recognize that each of these specialized roles make a distinct contribution to the strategic objectives of the organization. The short explanation is that people execute the strategic plan, and an organization with smarter, more talented, more experienced or better-trained people is going to have a competitive advantage in strategy formulation and implementation. Beer and Eisenstat (1996) note that organizations can foster talent, by developing it. There are many components to this process, but the key thing to remember about strategic HRM is that is it an ongoing process. Consider the different career paths within this discipline. Recruitment and selection, onboarding and training all contribute to building a great base of employees. Compensation management and employee relations are essential for retention, and risk management is an ongoing process that should deliver value by minimizing negative exposure, for example to lawsuits for violation of labor laws.

When the different elements and specializations within human resource management work to support the organization's overall strategies, they become strategic human resource management. The different elements are synergistic with each other, but also with the overall objectives of the organization. Consider a company like Google. They are essentially a knowledge business, with innovation being a major source of competitive advantage. In order to maintain that advantage, Google needs to attract the smartest people; if competitors have the best knowledge base they will have the innovations that give them competitive advantage. Thus, everything Google does with its human resources management is based on attracting the best talent in the field -- the pay is competitive, the work environment fits the needs of hard-working creatives, and the company ensures that it provides the best working environment The company competes globally as a knowledge business, so it has an entire unit of its HRM department dedicated to obtaining H-1B visas for top talent from all over the world, but it also has set up foreign subsidiaries to handle some of talent it cannot bring to the U.S. Every organization that wants to gain sustainable competitive advantage needs to build its HRM strategies around having the best people (Davoudi, Cherati & Kaur, 2012).

Different organizations are likely to have different strategic HRM plans, because they have different needs. If Google is an example of a company that needs to attract the best talent in order to compete, many other companies serve as an example of the opposite, where they need to find decent people at a low price, in order to maintain their cost leadership positions. There are different approaches to this -- Costco and Trader Joe's pay their employees more and seeks to minimize turnover, while Wal-Mart accepts staff transience as a cost of its low wages. Either strategy can work, as long as the total HRM strategy is coherent, each element supporting the others. When that occurs, the company can enjoy high productivity either by producing more or spending less (Huselid, 1995).