Complete Strategic HRM Best Practices (Document Bundle)

Complete Strategic HRM Best Practices PPT

Strategic human resource management (strategic HRM) provides a framework linking people management and development practices to long-term business goals and outcomes. It focuses on longer-term resourcing issues within the context of an organization's goals and the evolving nature of work. It also informs other HR strategies, such as reward or performance, determining how they are integrated into the overall business strategy.

Strategic HRM, or ‘people strategy', is about creating a coherent planned framework for employees to be hired, managed and developed in ways that supports an organization's long-term goals. It helps ensure that the various aspects of people management work together to drive the behavior and climate needed to create value and meet performance targets. It focuses on longer-term people issues, matching resources to future needs, and large-scale concerns about structure, quality, culture, values and commitment. It must also be a response to the evolving nature of work itself, which is explored in our Megatrends series and our Profession for the Future work.

There's no single HRM strategy that will deliver success in all cases. Organizations must define their own unique strategy according to their specific context, culture and objectives. People professionals are instrumental in applying their expertise to understanding organizational circumstances, and designing human capital value chains that reflect stakeholder demands.

A good business strategy is informed by people factors. This is driving demand for greater evaluation and reporting of human capital data.

Most organizations today recognize that people are fundamental to sustainable value creation, which is why they are often referred to as a business' ‘most important asset'. The idea of ‘human capital' is important here. Employees' knowledge, skills and abilities are assets which the organization should invest in and use to create sustainable value for the organization and its various stakeholders. The intangible value of an organization relating to the people it employs is gaining recognition among accountants and investors, and its implications for long-term sustained performance is now generally accepted.

Individual HR strategies may be shaped by the business strategy. For example, a business strategy for improving customer service may translate into discrete HR strategies involving the use of training plans or performance improvement plans. However, it's too simplistic to suggest that strategic HRM simply follows on from business strategy – the two must inform one another. The way in which people are managed, motivated and deployed, and the availability of skills and knowledge, should all shape the business strategy. Indeed, it's now increasingly common to find business strategies that are inextricably linked with, and incorporated into, strategic HRM, defining the management of all resources within the organization.

It emphasized the importance of individual HR strategies fitting with each other and operating within a strategic framework that incorporates both people and business issues. This research has also found that individual HR practices alone do not drive better business performance. For example, highly skilled individuals with valuable human capital can only generate value if they also have positive relationships with their managers in a supportive environment with strong values. All these factors will promote ‘discretionary behavior', that is, the willingness of the individual to perform above the minimum necessary or give extra effort. Hence strategic HRM should take account of the need to foster employee engagement and related states, such as motivation and commitment, all of which support organizational performance.