10 Proven Strategies to Build Your Strategic Human Resource Management

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Strategy Human Resource Management-The Need of the Hour

Need to fortify your Strategic Human Resouce Management (SHRM) then let’s try to grasp its different aspects. Creating Strategies to deal with anything in hand is an ideal approach for handling a task. Similarly, in Organization effective management comes from aligned strategies. Explicitly, strategy is the means to achieve organizational objectives. Moreover, a properly defined strategy helps an organization stay in the competitive market. Strategic Planning gives a well-defined outline according to which companies act in the future. Undoubtedly, Strategic Human Resource Management is an engrossing topic. So let’s try to understand it to get a better perspective on Strategic Management.

Evolution of SHRM

The evolution of Strategic Management first started in the 1930s. According to Hofer evolution of Strategic Management occurred in four paradigm shifts. These are actually four overlapping phases in the evolution of Strategic Human Resource Management. 

The four phases in the evolution of SHRM –

1. The first phase -The Paradigm of Ad Hoc Policy (Till the Mid 1930s)
2. Second Phase- Paradigm of Planned Policy (1930-1940)
3. Third Phase-Strategy Paradigm (1960)
4. Fourth Phase- Paradigm of Strategic Management (1980)

Understanding Strategic Human Resource Management

Strategic Human Resource Management involves aligning human resources with an organization’s strategic goals and objectives. It helps in improving business performance and developing organizational culture. Moreover, it fosters innovation, flexibility, and competitive advantage. 

The strategic goals of an organization are actually the vision of the business that has both quantifiable and qualitative results. Explicitly, these goals are the specific financial and non-financial targets that an organization aims to achieve in the next five years approx. In order to understand SHRM we need to look at all the important aspects related to it. 

HR and SHRM

Now let’s discuss the difference between HR and SHRM. Human Resource involves managing people in organizations in a well-structured manner. On the other hand, SHRM involves the alignment of the strategic business goals of the organization with human resources. SHRM is proactive in nature whereas HRM is reactive in nature.

 Realizing the Objectives of Strategic Human Resource Management

• To select the goal of an organization- In the first place, the organization sets goals with respect to its Human Resources.
• Learn to utilize Human resources optimally- To ensure best practices to utilize the Human Resources of the organization fully.
• Selection of the plan type- To make a beneficial chart for carrying out the objectives
• To Compensate ideally- To set the proper and reasonable compensation for the employees.
• Setting a standard evaluation system- Proper setting of performance and evaluation methods is crucial in Strategic Resource Management.
• To find out the relationships- Identifying the relationships among the different departments and thereby setting their duties and responsibilities.
• Determine strategies for future challenges- Organizations make strategies to live through the competition.
• To frame the HR policies- HR policies play a role in Strategic Human Resource Management.
• Learn to assess the existing HRM practices- HRM policies are reviewed regularly and adjusted based on employee needs and workability.
• To establish guidelines- Lastly, Strategic Human Resource Management develops guidelines for the Human Resource Department.

Why Strategic Human Resource Management is crucial for Organization

Strategic Human Resource Management is the key to reaching the main goals of an organization and is very crucial for an organization. Consider the below-mentioned points-

• Allows firms to forecast changing conditions-

Strategic Management allows firms to innovate in time and take advantage of new opportunities in the market. It provides a framework to build its decisions on long-range forecasts and not on momentary decisions. Thus, it allows the company to take steps at an early stage for effective management. Moreover, it stimulates thinking about the future.

• Organizations which embrace Strategic Human Resource Management are more effective- 

One of the reasons for an effective organization is definitely strategic Management. There is actually a relationship between better performance and planning. To sum up, Organizations that carry out strategic planning have a higher probability of success than which do not.

• Gives Clear Principles and Guidance to the Employers-

 Strategic Human Resource Management provides a framework for employees and management to achieve the company’s objectives. It gives a clear idea to employees about their responsibilities and where the organization is heading. Explicitly, it is a tool for management to control and evaluate. Moreover, it makes sure that the top executives agree on strategic plans and actions.

• The research-based approach helps in the further advancement of an organization- 

Attention to research and studies not only helps the management in the present situation but also in the long run.

Five Stages of Strategic Planning Process

The planning process comprises several steps. In order to reap the full benefits of Strategic Management, we must properly analyze the company situation and its status in the market. Some of these stages may go side by side or overlap. So now let’s look at the five stages that design the framework of the strategic thinking approach.

1. Mission and Policies

 The mission of the company is the vision and it defines the goal if the  

Company at a given point in time. The objectives can be understood from the company’s visionary target and financial goals. A sales target or growth is an example of a financial goal. Moreover, the policies also include corporate Social Responsibility.

2. Environmental Scanning

Strategic planning requires an overall view of the company’s risks, opportunities, and alternatives to create a roadmap for business operations. And for this reason, management does environmental scanning both internally and externally. This scanning is done by SWOT analysis, PEST analysis, and Porter’s five forces.

3. Strategy Formation

Environmental scanning leads to risks and alternatives, which benefits the company’s management. Thereafter, the management checks the feasibility of the alternatives before making any firm decisions on the strategies. This gives a clearly defined list of goals and ways to reach there. Also, the risks are evaluated. Furthermore, this process gives the final strategies to implement.

4. Strategy Implementation Stage

Implementation of strategies is a challenging process. First of all proper framework is prepared so that stakeholders understand the need for its implementation. After that, the participative team goes through it. 

5. Evaluation and Control

The last stage is very important in the strategic planning process. Implementation of strategies that are functioning properly or not is ensured in this stage. Eventually, any correction required is adopted immediately and employees are encouraged the proper functioning of these strategies.

Types of Strategic Human Resource Management in Organization

• Recruitment and Selection
• Learning and Development
• Formulation of Regulations
• Compensation and Benefits
• Resolving employee’s job difficulties 

Benefits of Strategic Human Resource Management

The benefits of SHRM are of two types financial and non-financial benefits. Financial benefits help in increasing sales, profits, and productivity in firms.

Financial benefits –

1. Planning for Solvency

As strategic management deals with long-term goals, it analyzes the existing assets and net worth in the balance sheet. Also, this tells if they are able to meet the expenses in the long run. Besides, Strategic planning helps an organization take all the necessary steps to optimize the asset-debt ratio and thus maintain solvency. Indeed a solvency plan helps to achieve growth and expansion.

2. Profitability Management

Strategic Human Resource Management helps to get feedback from different department levels. This feedback helps to remove problems at different hierarchy levels in the organization. Moreover, it points out the existing conditions based on which management develops their strategic visions and improves financial gains.

3. Liquidity Monitoring

Since Strategic Management constantly checks cash flow statements or liquidity reports it ensures cash flow aligns with long-term goals. Businesses can prepare beforehand to protect themselves from a liquidity crisis. Moreover, they can take part in activities according to the need of the situation which results in monetary gains.

4. Increase in Revenue Generation

Strategic Management empowers Senior Management as it helps in taking necessary changes in the existing operational processes. Moreover, Companies outperform their competitors by making better strategies. Thus, it enables management to come up with innovative ideas to increase their revenue generation. Furthermore, it helps to bring more investors and maintain relationships with the present ones.

5. Avoidance of Legal Risks

Strategic Management includes various methods to monitor its policies so it helps in reducing legal risks. The various ways to monitor are employee-related policies, conflicts of interest policies for board members, and other internal controls. Furthermore, strategic policies also include legal consultation from an insurance provider or attorney. Thus, it helps them avoid the risk of penalties and maintain legal compliance.

Non- Financial Benefits

Strategic Human Resource Management helps the management to be more rational, logical, and systematic in its strategies.

1. Improved Decision Making

Strategic Management helps in making better decisions in a shorter time. For instance, you can decide easily if you want to invest in an upcoming project or not. You are in a position to take a better and more informed decision. And it helps to understand whether the project aligns with your ideas or not.

2. Better Human Resources

Strategic Management includes a proactive staffing policy that ensures hiring the best talent and more competitive ones. Companies prepare detailed job descriptions, improve recruiting practices, and provide 360-degree feedback. Moreover, they take steps to boost employee satisfaction. 

3. Understanding of Competitor’s strategies 

Strategic Management makes you learn all the practices followed by your competitors. This helps you to take decisions that are better than your competitors. Thus it helps you to strengthen your business and maintain the brand awareness goals.

4. Problem Finder.

SWOT analysis is a part of Strategic Management. Detailed analysis of the organization’s strengths, weaknesses, opportunities, and threats points out the existing problem if any. And thus organization takes the necessary steps based on the problems. Some of the problems are like recruiting more staff, changing the pricing model, adding distribution channels, etc.

For instance, a new competitor opening a similar business can be a threat to your business. As a result, you will offer special discounts, arrange loyalty campaigns, and other strategies to entice your customers.

5. Greater Stability

Strategic Management helps you to expand your business and not depend on individual products or clients. It helps to acquire new markets or businesses. Thus it sets free from working on others’ terms and stops shutting down the business. 

Challenges in Strategic Human Resource Management

1. Unforeseeable Future

Strategic Management anticipates the future environment and makes plans accordingly. And management can only analyze the environmental factors based on available data. However, unforeseen happenings may spoil strategic planning. Thus, the best is to follow an approach that is not highly dependent on future anticipation. 

2. Less Flexible

Strategic Management follows a certain set of predecided rules for a long period. The organization picks up only those new opportunities that align with the strategy. Therefore working process becomes restrictive at times. 

3. Tough Implementation Process

Strategic Management sometimes has internal disputes and everyone does not fully cooperate with it. Lack of adequate support also arises from members of the management. These conditions can adversely affect the business. The best way is to have strong leadership and proper resource allocation to carry out the goals. 

4. Less Cost-effective process

For several small companies and non-governmental organizations, the cost of strategic management is huge. Strategic Management implementation requires analyzing the cost-benefit ratio first. And, most of the time there are additional costs of hiring external consultants. As a result, Companies take assistance from funding agencies and other volunteering organizations. Therefore, the methods are not cost-effective process. 

Top Examples of proven Strategies for building a Business

There are different types of business strategies and so it is fruitful to consider the most successful and applied strategies.

1. Tesla Strategy

The company from the start had declared itself a brand of expensive and

 luxurious vehicles. Moreover, they did not choose to gradually develop as a brand of comfortable and modern cars. For this reason, they had to incur huge costs in the budget. 

Tesla also as a part of its strategy judged the problems well that could derail its plans to implement a cost-effective car for the mass market. So, they fully controlled the supply and production of critical spare parts e.g batteries. Tesla too needed investment and for that reason, it built its brand to attract investors. Ellon Musk knew the desire of people to touch technologies of the future and made his strategy likewise.

2. Alibaba Strategy

Alibaba.com is a B2tB eCommerce company and has business strategies like Amazon and eBay. For that reason, it has taken over China’s entire Internet trading space. Moreover, it has become one of the world’s leading B2B eCommerce marketplaces. The company’s strategy focuses on the further development and support of the ecosystem. Alibaba’s expansion plans are to get more than 2 billion customers worldwide. Furthermore, it focuses on increasing the client base, product range, and expansion abroad.

The company implements its strategy by following the below methods

• Giving competitive prices
• It gives quality ratings for goods and sellers
• Alibaba has a convenient service system
• It has an individual approach to clients. 

3. HubSpot Strategy

3. 

The company is a CRM platform for scaling companies to deliver a world-class customer experience in one place. Hubspot has succeeded in developing a platform for commenting and creating helpful content on websites. Moreover, it allows blogs to bypass paid advertisements on Google. 

Hubspot’s business strategy is to fulfill the requirements of the clients with their applied knowledge. Thus, it caters to the need of the client by promoting their product. For instance, it showed you how to monetize a blog, website, or e-book.

4. Booking.com Strategy

Booking.com is the world’s largest online travel agency. Since 2009 it uses social media as a part of its tourism marketing strategy. Its mission is to assist people in exploring the world. Booking’s strategy focuses on the value that the brand is providing its customers which also includes storytelling. 

Booking.com follow its strategy in the following ways

• They use modern technologies to give new experiences.
• Customers are given the best value for money, convenience, and services
• Growing partnerships and providing them with high-quality and diverse platforms and resources
• They invest in profitable parts of the business
• Booking.com spends millions on advertisement, branding, and others.

5. PayPal Strategy

The company has become one of the largest online payment processors in the world. PayPal has entered the most challenging areas and requires a lot of capital, government approvals, and customer trust. In fact, this has to be built over years. PayPal took the plunge and succeeded.

Their success is based on their business strategy as follows

• PayPal dauntlessly chooses its partners among sellers, unlike banks
• It adopts an international business strategy and has become a payment system on the internet. Especially, it is widely used on eBay and other platforms.

Benefits of PayPal’s adoption of Strategy

• Banks have started to take PayPal seriously and consider it a worthy competitor.
• It ranks above average banks and gained the trust of customers
• PayPal keeps purchases private and only uses them for analytics
• It launches time-to-time payment innovations in the market.

6. Airbnb

Airbnb stands for “Air Bed and Breakfast” and is based in San Fransico, California. It is an online marketplace that lets property owners rent out their spaces for homestays. Actually, their start was not so good. At first, there was less use of technology. Firstly, they let their guests travel. Thereafter they launched a website for fellow travelers. But the response was not good. The problem lies in the poor use of marketing tools. As a result, their ads were not attractive and did not arouse interest and trust among potential customers. Hence they replaced all pictures with high-quality and pixelated ones. Moreover, they added guides, reviews, testimonials, etc. to the site. At first, they were focused only on the main problem later they actively made changes to the business.

7. Apple Strategy

The company has successfully created a unique brand that is connected with success and prosperity. Apple has made wise decisions to attract the attention of customers. Previously, it was not a pioneer in the field of technology but with well-planned strategies, it was able to create a niche product. Apple created an image of superior luxury products with guaranteed high-quality functionality. 

Apple’s business strategy follows the following principles

• Apple uses its designing capabilities and hardware expertise to create branded and stylishly designed products
• It has regular technical updates
• Apple has created a closed ecosystem
• It delivers nice and premium packaging products. 

8. Hilton Worldwide Holdings

The Company has acquired a huge name in the service industry company. Whoever stayed in the Hilton Hotel is mesmerized by its service. They maintain such high standards with the help of a diverse workforce. With this in mind, Hilton has adopted a culture that represents its day-to-day work. Explicitly, they have maintained a highly strategic approach to building their culture. Furthermore, they have introduced a quantitive analysis to maintain their culture. The analysis includes ‘ the balanced scorecard’ and ‘ the team member survey’. As the culture is carefully managed Hilton employees at all levels are highly committed and motivated to contribute to the company’s mission. 

9. CISCO

The Cisco talent Cloud is basically an internal CRM that allows managers transparency to their employee’s skills and experiences. It also provides guidance to employees for taking advancement in their careers. Thus, Cisco developed its own HRM technology as a strategy to excel in its business. Cisco has a concept of ‘one-size-fits-one employee experience. Their policy is working and it is ranked number one in Fortune’s Best 100 Companies to Work For. Moreover, it is able to attract top talent to help meet business goals. Besides, senior managers have access to real-time intelligence on team performance. And employees also get the opportunity to learn how to effectively complete a particular goal.

10. Google’s Strategy

Undoubtedly, from the start, Google has undertaken business strategies that utilize its huge data collection to create meaningful experiences for its customers. It has tons of employee perks and amazing” Googlified “ facilities. But its strategic approach to HR is the winning strategy. Moreover,  the Project Oxygen initiative is an ongoing study into management practices that helps nurture key management behaviors. Google has efficient people to handle its in-depth statistical analysis. There is no second doubt why Google’s employees are the most productive in the world as it collects data to improve their experiences. Consequently, it has an overall improvement in people management as well as in turnover, satisfaction, and performance over time. 

Ace your knowledge in SHRM with Henry Harvin HR Professional Course

Want to become a pro in Human Resource Management then look for the courses by Henry Harvin. Henry Harvin is an esteemed institute and it is recognized by leading media channels like Business World, Statesman, The Hindu, and others. The institute is the winner of the Top Corporate Training Award, a game-based learning Company of the Finder 40 Bussiness World Award. Undoubtedly, HR Professional Course will help you to become proficient and skilled in Human Resources. Along with this, it covers almost all the HR aspects in the present work scenario. 

Subjects covered in Henry Harvin Certified Human Resource Professional  Course

• HR Operations
• Talent Acquisition
• Compensation and Benefits
• Employee Relations
• Indian Labor Laws
• Corporate HR Functions and others

Main Pointers of the HR Professional Course

1. 9 in one Course Module-structure comprising of live classes, projects, Internship, Placements, E-Learning, Bootcamps, Hackathons, etc.
2. Hands-on Training on  different HR projects and applications
3. Get training on SAP R3 systems
4. Become eligible for 1-year Gold Membership
5. Access the various eLearning tools
6. Become proficient in Advanced HR Management tools
7. Gain knowledge about the system monitoring process and HR document generation system.
8. Learn various HR skills like Six Sigma Techniques

Henry Harvin courses are available in major cities. The curriculum of CHRP is a comprehensive course. Moreover, their trainers are industry experts and professionals. 

Summing Up

Strategic Management Professionals are in huge demand be it in the public or private sector and it does not matter whether the demand is in startups or in big reputed companies. They are actually the pillars of an organization based on which the organization fulfills its goals and visions. The best talent and knowledgeable people are always in demand. As well as, the future path of Strategic Human Resource Management is bright and hopeful. SHRM covers a vast range of topics that extend beyond the duties of HR personnel.

In this blog, we first walk through its definition, HRM, and planning process. Subsequently, we deal with its benefits, organizational impact, and its application in various successful organizations. 

To sum up, Strategic Management and planning are a must for every business organization. It not only brings creativity but also an improved environment for the betterment. In short, build a positive company culture with SHRM. Don’t you think the better you strategize it increases the chances of a successful business?

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