What is strategic human resource management and why is it important?

Understand the meaning of strategic human resource management, how it works, its importance, its advantages and disadvantages and its relationship with business strategy. 

What is strategic HRM? 

Strategic human resource management (also known as SHRM or strategic HRM) is a critical concept in human resources. Ultimately, the role of strategic HRM is to align the human resource strategy with the overall business strategy.  
 
As CIPD (Chartered Institute of Personnel and Development) summarised, strategic human resource management is “a framework for employees to be hired, managed and developed in ways that supports an organisation’s long-term goals.” 

Through the adoption of SHRM, businesses gain the capacity to enhance their proficiency in managing employee performance and fostering professional growth. Beyond this, it empowers them to craft targeted programs and policies that harmoniously align with and bolster the company's overarching strategic objectives.

What are the key components of strategic human resource management (SHRM)? 

Although the function is far-reaching and different teams adopt different approaches to delivering strategic human resource management, the key components of strategic HRM remain and can be found below: 

• Planning: The foundation of SHRM lies in strategic and workforce planning. HR professionals collaborate with senior management to identify the organisation's short-term and long-term objectives, as well as future needs, and devise HR strategies that support them. Part of this component involves identifying and developing potential leaders within the organisation, to ensure a smooth transition of key roles when required. 

• Employee satisfaction, engagement and relations - SHRM seeks to create a positive, harmonious and engaging work environment that fosters employee satisfaction, collaboration, motivation, and loyalty, thereby enhancing productivity and reducing turnover. This component also seeks to provide employees ongoing learning and training, guaranteeing their acquisition of essential skills and knowledge to meet both present and future organisational needs.
  

• Compensation and benefits - Such systems are designed to motivate and retain employees while also aligning with the organisation's financial objectives.
  

• Performance management - An integral pillar within the realm of strategic human resource management (SHRM). By facilitating the process of evaluating employee performance, it plays a vital role in ensuring that a company’s workforce not only meet – and often exceed – expectations, but also actively contribute to elevating the company's overall success and financial performance. 

• Result-oriented, data-driven approach – SHRM teams play a collaborative role alongside senior executives in formulating the organisation's operational metrics. Working closely with management and utilising existing data, they identify emerging trends, devise risk management strategies, and ensure companies are well prepared to mitigate potential pitfalls in hiring or resource allocation.  

These key components of SHRM work collectively to create a dynamic and agile HR framework that supports the organisation's long-term success and competitiveness in the ever-changing business landscape. 

Advantages and disadvantages of strategic human resource management 

Benefits of SHRM for organisations 

The benefits of Strategic Human Resource Management (SHRM) are plentiful. SHRM ensures that day-to-day practices align with business objectives, leading to strengthened recruitment, improved employee performance, and increased employee engagement and satisfaction.  

By focusing on the key components of SHRM, as listed above, it ensures business agility and cost efficiency, mitigates HR risks, and fosters a positive organizational culture. More often than not, these factors ultimately lead to a company’s success.  

Challenges of SHRM 

Future Trends in Strategic Human Resource Management  

Given the current economic and cultural landscape, future trends in strategic human resource management are likely to include: 

• Emphasis on Remote and Hybrid Working: Creating strategies for managing remote and hybrid working arrangements, to cater to a post-pandemic distributed workforce; addressing issues related to employee engagement, performance measurement and work-life balance.  

• Technology Integration Including Use of Artificial Intelligence: It is likely SHRM will utilise technological advances including artificial intelligence (AI), machine learning, and data analytics, to streamline HR processes such as staff acquisition and enable data-driven decision-making. 

• Heightened Focus on Employee Well-being: As businesses become more and more aware of how crucial employee well-being is for boosting productivity and engagement, SHRM is expected to prioritise initiatives that foster mental health support, work-life balance, and wellness programs.
  

How an MSc can help you adapt to and embrace strategic human resource management 

Our Global Human Resource Management course equips students with the skills they need to successfully embrace a strategic human resource management role, learning from real-world examples and industry-leading experts. 
 
HR professionals trained in these areas help companies realise their global business goals, which makes them highly sought-after candidates for top job roles. 

Gain the skills and knowledge you need to effectively manage human resource issues on a global scale with our part-time Master’s course. Discover the benefits of choosing to study MSc Global Human Resource Management: