Strategic Human Resource Management (SHRM), conceptually speaking, aligns HR Policies and Goals with Business Policies and Goals. It is a relatively new concept compared with Human Resource Management (HRM).
Generally, the professional career of an individual in an organization can be segregated into three parts, namely, the individual JOINS the organization, the individual WORKS in the organization, and finally, the individual EXITS from the organization. Correspondingly, from the organization’s point of view, it has to PROCURE people, DEVELOP people, and finally MAINTAIN people.
Human Resource Management refers to managing people, where ‘people’ represent intellectual capital. Thus, functions of Human Resource Management are three-fold: PROCUREMENT, DEVELOPMENT, and MAINTENANCE. In an alternate parlance, Procurement is tantamount to Talent Acquisition, while Development and Maintenance can be termed as Talent Retention. So far, there is nothing nebulous.
However, the problem arises when these functions of HRM are discharged in silos, in utter disregard of mainstream business requirements. What’s imperative is the process of managing people should be integrated with specific needs of the business. When these processes are dovetailed with requirements of the business, the phenomenon is nomenclated as ‘Strategic Human Resource Management’. This will become clearer once examples are cited to illustrate this point.
For instance, let us assume that an organization is in need of people but financially it has not been doing well, in such a scenario if the organization meets its manpower needs through ‘organization restructuring’ or ‘employee re-development’, then the approach can be termed as ‘Strategic Human Resource Management’ approach in hiring process.
Let us take another example. Training is a cardinal function of HR. Organizations conduct training sessions periodically round the year. Let us assume that the margins are under pressure and the organization is not making profits. In such a situation, if the organization, instead of conducting perennial training, resorts to Just In Time Training (JIT) as and when needed, then it is an SHRM approach to the training function.
Yet another example. Performance appraisal is crucial in HRM. Several methods prevail, which fall under conventional Human Resource Management approaches. However, if the organization utilizes Balanced Scorecard, where financial perspectives are integrated with learning and growth perspectives, internal business process perspectives, and customer relationship perspective (which are incidentally the four components of Balanced Scorecard), the performance appraisal approach is said to be in conformity with SHRM.
One last example. Compensation Management is inherent in Human Resource Management function. ‘Time-rate Method’ and ‘Piece-rate Method’ are traditional methods of Compensation Management. As against this, if the ‘Payment By Results’ (PBR) approach is adopted, where there is a component of variable pay, the approach is SHRM in nature.
Therefore, the Strategic Human Resource Management approach is an apt choice as it helps an organization to make its Human Resource Management Policies fall in line with its Business Policies. Only then, Human Resource Management Roles can transcend from ‘Strategic Partner’ to ‘Administrative Expert’ to ‘Employee Champion’ and eventually to ‘Change Agent’.
Dr. Debaprasad Chattopadhyay
Faculty – HR
Globsyn Business School