What is Strategic Human Resource Management?

Strategic human resource management is shifting the way business owners see the HR function. It wasn’t so long ago that the HR department was viewed as a cost centre staffed by administrators and efficient troubleshooters. But times are a-changing and strategic human resource management is increasingly recognized as a crucial way of working.

In this blog, we define what strategic HRM is and how it can benefit your business. 

Strategic Human Resource Management defined

How does strategic HRM differ from everyday HR and people management? 

Post-pandemic, why is strategic HRM so important for every business? 

Five key tips on how to implement strategic HRM within your business 

In summary 

What is Strategic Human Resource Management (Strategic HRM)? 

The CIPD defines strategic HRM as “a framework for employees to be hired, managed and developed in ways that supports an organisation’s long-term goals.” 

The concept of strategic human resource management was developed in the early 1990s and then popularised in the early part of the 21^st century. You may see it shortened to strategic HRM or referred to as people strategy. But whatever you call it, strategic human resources has become an essential component for ambitious SMEs and larger corporations alike.

How does Strategic HRM differ from everyday HR and people management?

'What do we need to do to keep the wheels turning?’

Everyday or ‘traditional’ HR and people management is an administrative and reactive approach to managing people. At its simplest, traditional HR is about keeping the business running smoothly by ensuring there are enough people to do the work and that everyone is happy and operating legally. In this instance, the HR department deals with grievances, updates policies in line with legal requirements and ensures everyone gets paid on time. Recruitment and training needs would be planned in line with requests from across the business, and employee health and wellbeing would be dealt with on a case-by-case basis as and when needed.

'What do we need to do to support the business vision?’

In contrast, strategic HRM takes a wider, more proactive view. Rather than dealing with issues as they arise, a strategic approach to HR management links people management to business goals and the broader vision. By asking instead, ‘what do we want to achieve?’, a strategically focused HR department uses employee expertise and energy to deliver those goals.

Strategic HRM uses a wide range of tools to deliver company goals – to attract, retain, develop and reward employees to support the organisation and improve the employee experience.

Post-pandemic, why is strategic HRM so important for every business?

While throwing so much into the air, the pandemic focused our attention on the importance of a solid people strategy.

With altered employee expectations and continuing uncertainty, a reactive approach to HR is no longer enough. Businesses who want to thrive must instead consider a more strategic approach to HRM.

There are several areas where strategic HRM will be especially important.

• Supporting new ways of working. A shift in working practices needs a proactive and strategic approach to for success. HR managers need to consider how remote or hybrid working can really support their businesses. How can you make it work? What steps can you take to ensure hybrid working won’t harm diversity and inclusion progress or create a ‘them and us’ culture in your business?
• Employee health and wellbeing. Even though lockdowns focused on preserving physical health, it has been the mental health aspect of the pandemic that affected many people’s resilience and overall wellbeing. Added to this, the pressure hitting the NHS means that otherwise routine medical care may be deprioritised. This may impact the health of your workforce as they struggle to access the care they need.

Strategic HRM would take this into account by for example arranging medical insurance for employees or giving staff access to a private GP. It would also proactively support employee wellbeing, especially considering some employees have been disproportionately affected by the stress of lockdown. The benefit of this would be a healthier and more productive workforce. In contrast, waiting for issues to arise may cost businesses dear with high absences, medical insurance claims and presenteeism.

• Support and measure culture. The recent shift in society and working practices can’t help but affect company culture. A strategic approach to HRM will help keep tabs on overall culture development and ensure cultural goals are still relevant. Rather than allow company culture to snowball, taking a strategic attitude will ensure the business continues to work towards these goals and takes action to meet the vision.