Strategic Management of

human Resources
Unit 5
 Strategic Human Resource Management

• Strategic Human Resource Management (Strategic HRM) is an approach to

managing human resources within an organization that aligns HR practices and
policies with the overall strategic goals and objectives of the organization.
• It involves integrating HR functions with each other and with the broader business
strategy, taking a long-term perspective, and customizing HR strategies to meet
the specific needs of the organization.
• Strategic HRM treats employees as valuable assets and emphasizes investing in
their development, engagement, and well-being to maximize their potential
contribution to the organization.
• It also relies on data and analytics to make informed decisions and views HR
professionals as strategic partners within the organization (Lengnick-Hall et al.,
2009).
 Key principles and elements of Strategic HRM
• Alignment with Organizational Goals: Strategic HRM seeks to understand and support
the achievement of the organization's strategic objectives. HR policies and practices are
designed to contribute to the organization's success.
• Integration: It involves integrating HR functions (recruitment, training, compensation,
performance management, etc.) with each other and with the overall business strategy.
This ensures that HR initiatives are consistent and synergistic.
• Long-term Perspective: Rather than focusing solely on short-term needs, Strategic HRM
takes a long-term view of HR planning and development. It considers the future
workforce needs and talent pipelines.
• Customization: HR strategies are tailored to the specific needs and culture of the
organization. There is no one-size-fits-all approach to Strategic HRM.
• Proactive Approach: Instead of reacting to HR issues as they arise, Strategic HRM
anticipates potential challenges and develops proactive solutions. This includes talent
forecasting, succession planning, and workforce development.
• Human Capital Management: It emphasizes treating employees as valuable assets and
investing in their development, engagement, and well-being to maximize their potential
contribution to the organization.
• Measurement and Analytics: Strategic HRM relies on data and analytics to make
informed decisions. Metrics are used to assess the effectiveness of HR programs and their
impact on organizational goals.
• Continuous Improvement: HR strategies are not static but evolve to meet changing
business conditions. Continuous feedback and adjustment are crucial.
• HR as a Strategic Partner: HR professionals are seen as strategic partners within the
organization, contributing to decision-making and helping to shape the overall strategy.
• Competitive Advantage: When implemented effectively, Strategic HRM can give an
organization a competitive advantage by attracting, retaining, and developing the best
talent.
 Relationship between HR Strategy and Overall corporate strategy
• Alignment: HR strategy should be closely aligned with the corporate strategy. This means that the
HR department should understand the organization's mission, vision, and strategic objectives and
design its HR practices and policies to support and further those goals. For example, if the
corporate strategy includes expanding into new markets, HR might need to focus on recruiting and
developing employees with international expertise.
• Talent Acquisition: HR plays a key role in acquiring the right talent to execute the corporate
strategy. This involves workforce planning, identifying the skills and competencies needed, and
sourcing candidates who possess them. A misalignment in talent acquisition can hinder an
organization's ability to execute its strategic plans effectively.
• Workforce Development: HR is responsible for developing the skills and capabilities of the
workforce. An effective HR strategy includes training and development programs that align with
the skills required to implement the corporate strategy. Continuous learning and skill development
help employees adapt to changing business environments.
• Performance Management: HR establishes performance management processes that link individual
and team goals to the corporate strategy. Employees' performance evaluations and feedback should
be tied to their contribution to strategic objectives. This encourages employees to focus on
activities that support the corporate strategy.
• Compensation and Rewards: Compensation and rewards systems should be designed to motivate
employees to align their efforts with the corporate strategy. For example, variable pay and bonuses
may be linked to achieving specific strategic targets.
• Culture and Values: HR can shape the organizational culture and values to reflect those that support
the corporate strategy. For instance, if innovation is a core part of the corporate strategy, HR can
foster a culture that encourages creativity and risk-taking.
• Change Management: HR is instrumental in managing change within the organization, particularly
during times of strategic shifts or restructuring. Effective change management ensures that employees
understand and embrace the corporate strategy and its implications.
• Metrics and Analytics: HR uses metrics and analytics to measure the effectiveness of HR programs
and their impact on the achievement of corporate objectives. This data-driven approach helps
organizations make informed decisions and adjust strategies as needed.
• Employee Engagement and Retention: An engaged and motivated workforce is more likely to
contribute to the success of the corporate strategy. HR strategies for employee engagement and
retention are critical to ensuring that employees are committed to the organization's goals.
• Feedback Loop: There should be an ongoing feedback loop between HR and senior management. HR
should provide insights and data to inform strategic decisions, and senior leaders should provide input
on HR strategy to ensure alignment.
 HR as a factor of Competitive advantage
• Talent Acquisition: HR plays a crucial role in attracting and hiring top talent. Having the right
people with the right skills and cultural fit can set an organization apart from its competitors.
This involves not only hiring for current needs but also forecasting future talent requirements.
• Employee Development: HR is responsible for employee training and development. When
employees are continually improving their skills and knowledge, they become more valuable
assets to the organization. This can lead to increased productivity, innovation, and
competitiveness.
• Employee Engagement: Engaged employees tend to be more committed and motivated. HR
can implement strategies to enhance employee engagement, which can positively impact
productivity, customer satisfaction, and overall performance.
• Retention and Knowledge Transfer: Retaining key talent is often more cost-effective than
constantly hiring and training new employees. HR can implement retention strategies and
facilitate knowledge transfer between experienced employees and newer ones, ensuring that
valuable institutional knowledge is preserved.
• Culture and Values: HR can help shape and maintain an organizational culture that fosters
innovation, collaboration, and adaptability. A strong culture can be a source of competitive
advantage by attracting like-minded employees and customers.
• Performance Management: HR can design and implement performance
management systems that align employee goals with organizational objectives.
When employees are clear about their roles and how they contribute to the
organization's success, it can improve overall performance.
• Change Management: In an ever-evolving business landscape, the ability to adapt
to change is critical. HR can facilitate change management processes, helping
employees and the organization as a whole to embrace change more effectively.
• Legal and Compliance: Staying compliant with labor laws and regulations is
essential to avoid costly legal issues. HR ensures that the organization operates
within the legal framework, reducing risks associated with non-compliance.
• Diversity and Inclusion: A diverse and inclusive workforce can lead to a broader
range of perspectives and ideas, which can drive innovation and problem-solving.
HR can implement diversity and inclusion initiatives to leverage these benefits.
• Cost Management: HR also plays a role in cost management, such as optimizing
compensation and benefits packages to attract and retain talent while maintaining
cost-efficiency.
 Managing Diversity in the workplace
• Managing diversity in the workplace is essential for creating an inclusive, innovative, and productive
work environment. A diverse workforce brings together people with various backgrounds, perspectives,
and experiences, which can lead to better decision-making, creativity, and problem-solving. Here are
some key principles and strategies for effectively managing diversity:
• Leadership Commitment: Senior leadership must demonstrate a strong commitment to diversity and
inclusion. Their commitment sets the tone for the entire organization and signals that diversity is a
priority.
• Diversity Training: Implement diversity and inclusion training programs for all employees to raise
awareness and foster understanding of different cultures, backgrounds, and perspectives. Training
should focus on promoting empathy and reducing biases.
• Inclusive Policies and Practices: Review and revise company policies and practices to ensure they are
inclusive. This includes hiring practices, promotion criteria, and employee benefits. Ensure that these
policies do not inadvertently discriminate against any group.
• Diverse Recruitment: Broaden your recruitment efforts to attract a diverse pool of candidates. This may
involve using diverse hiring panels, utilizing diverse recruitment networks, and removing potential
biases from job descriptions.
• Equal Opportunity: Ensure equal opportunities for career advancement and development for all
employees, regardless of their background. This includes providing mentorship and sponsorship
programs.
• Employee Resource Groups (ERGs): Establish ERGs or affinity groups where employees with shared
characteristics or interests can connect, share experiences, and offer support. ERGs can be valuable for
networking and building a sense of belonging.
• Inclusive Leadership: Train and develop leaders to be inclusive. Encourage them to actively listen to
employees, promote open communication, and value diverse perspectives.
• Feedback and Surveys: Collect feedback from employees about their experiences with diversity and inclusion
in the workplace. Use this feedback to make necessary improvements.
• Zero Tolerance for Discrimination: Clearly communicate a zero-tolerance policy for discrimination and
harassment. Ensure employees know how to report incidents and that there are swift and fair consequences
for violations.
• Diversity Metrics: Track diversity metrics and set specific, measurable, and achievable diversity goals.
Regularly report progress to hold the organization accountable for its diversity initiatives.
• Cultural Competence: Encourage employees to develop cultural competence by providing resources, training,
and opportunities for cross-cultural interactions.
• Celebration of Differences: Create opportunities to celebrate different cultures, holidays, and traditions within
the workplace. This can promote understanding and build camaraderie among employees.
• Continuous Improvement: Diversity and inclusion efforts should be ongoing and subject to continuous
improvement. Regularly assess the effectiveness of your strategies and adjust them as needed.