What is Strategic Human Resource Management?

Strategic human resource management (HRM) is a proactive, future-oriented HR practice in which HR leadership develops and taps into current workforce talent to help a company achieve its broader business goals.

Being strategic about the strengths of a company’s people—and the rich skill sets and backgrounds they bring to the workplace—requires an understanding of how a company currently manages human resources and how they can be better leveraged to accomplish a goal. With a solid understanding of current HR management and a future state, a human resource strategy serves as a roadmap for how to get to the goal.

See also: Human Resources (HR) Software Guide

What is strategic human resource management?

Strategic human resource management is an approach to maximize the value that employees bring to an organization. In order to leverage a workforce in the most optimal way, companies need a human resources strategy.

A human resources strategy outlines how HR will develop and tap into employee strengths to add value and contribute to a company’s broader goals. Each company’s strategy will look different depending on the company size, industry, culture, goals, and current strengths and weaknesses.

What are the benefits of a human resources strategy?

Depending on the strategic emphasis, a company can reap the following benefits from an HR strategy:

• Orientation: A strategy provides a sense of direction and includes milestones and built-in accountability.
• Higher Morale: Having a people-centric plan that management, HR, and employees support has positive downstream effects on employee satisfaction, performance, and workplace culture.
• Stakeholder Empowerment: An actionable plan creates a sense of purpose, ownership, and responsibility for stakeholders at all levels. Empowerment boosts engagement which increases the chances of success.
• Better Retention: An HR strategy provides direction which, in turn, brings about a cohesive, more engaged workplace culture that employees want to be a part of. When employees want to stay, reduced turnover means decreased hiring expenditure.
• Preparation and Resilience: When HR has a strategy in place, it minimizes the chances of business disruption that can arise as a result of skills gaps or staffing shortages.

How to create a strategic human resource management strategy

Look at current business and HR data

Get a sense of the business’s current circumstances, pain points, and opportunities by first looking at current business data. Business intelligence software like Qlik or Tableau provide comprehensive as well as drill-down insights for points of improvement.

Read more: Qlik vs Tableau: BI Software Comparison

Compare comprehensive business data to HR-specific data from the human resources information system (HRIS) to identify points of overlap where HR can support and directly impact the company’s overarching goals.

For example, HR metrics that have ripple effects on the rest of the company include:

• Turnover rate, employee performance, and compensation strategy all impact finance.
• Employee performance, skills, gaps, and time to hire all impact if and how things get done, from day-to-day tasks to lofty initiatives.
• Skills gaps, time to hire, average employee tenure, and average time to promotion impact employee morale and company culture.
• Feedback about the workplace culture from exit interviews, pulse surveys, or reviews is a barometer for how well the company trains managers and leaders.

Set goals

Making these connections between people management and the business’s performance uncovers critical opportunities to act on. And these opportunities need to be backed by qualitative and quantitative data points like those noted above.

HRIS and BI software generate reports or display dashboards to identify opportunities for improvement in HR processes. Human capital management (HCM) systems with predictive people analytics, such as Workday HCM and Oracle HCM, go beyond assessing a company’s current needs by providing forecasting tools to make a well-informed data-driven decision about future workforce needs. These are good starting points to coming up with goals and an actionable HR strategy.

Also read: Workday vs Oracle HCM

Develop programs, processes, and policies to achieve your goals

Create goal- and budget-aligned programs, processes, and policies that feed into and support broader business strategy.

Programs, processes, and policies that HR might create to support the bigger business goals might fall within these general categories:

• Compensation and benefits to attract and retain top talent.
• Performance management to routinely assess and improve employees’ performance.
• Training and development to invest in employees’ professional development.
• Employee relations to cultivate a supportive, cohesive work environment to retain talent.

HR can plan for specific initiatives and set goals within these areas. For instance, if training and development is a priority to help the company expand into new markets, starting a mentoring program or rolling out a learning management system (LMS) are just a couple of ways HR can support that company goal.

Invest in the right software

The feasibility of people-centered initiatives doesn’t entirely fall on people to implement. Software tools help or even take over initiatives outlined in HR’s strategy, as they produce valuable insights, especially in goal-setting and progress-tracking.

Companies prioritizing efficient HR operations should check out HRIS software, as these typically include automations that boost HR efficiency and enable employee self-service. Examples include Rippling, Gusto, and ADP Run.

Rapidly growing companies prioritizing hiring in their HR strategy should invest in applicant tracking systems (ATS) and recruiting software. Applicant tracking systems like Greenhouse and JazzHR help companies manage candidate pipelines for multiple positions at once by keeping employees moving with automated workflows and candidate communication. Recruiting software solutions like TriNet HR Platform, Zoho People, and Breezy HR:

• Use AI to source and engage talent faster than the manual work of a hiring manager or hiring team.
• Syndicate job posts for maximum reach.
• Offer creative ways of tapping into often-overlooked talent pools through niche job boards, passive recruiting, and talent discovery tools.

Also read: 9 Employee Recruitment Strategies to Improve Your Hiring Process

Companies whose HR strategy focuses on people development and retention should utilize performance management software, such as BambooHR, Lattice, and Namely, for employee development.

Training, reskilling, and upskilling in a learning management system is a logical next step for employees who are ready to expand their skill set. Examples of top LMS include Absorb LMS, Docebo, and 360Learning.

Culture-oriented HR strategies influence both recruiting and retention from an angle of how employees connect with and relate to one another in the workplace. Fetcher, Jobvite, Paylocity, Workable, and Zoho Recruit are examples of recruiting software solutions that support diversity, equity, inclusion, and belonging (DEIB) efforts by:

• Anonymously screening resumes and assessments.
• Integrating with a variety of job boards that target underrepresented demographics.

Employee engagement software improves company culture by soliciting, analyzing, and enabling actionable acting on feedback.

Also read: Strategies for Cultivating a Diverse Talent Pool

Course correct if necessary

As with any plan, expect change to happen as the HR strategy gets implemented. Unforeseen scenarios can change an HR strategy in ways big and small, so companies should have a change management strategy in place to account for situations that require a company to pivot or reprioritize.

Strategic human resource management planning is as strong as the software that supports it

Strategic human resources planning is a forward-thinking approach to managing a workforce in a way that leverages current talent and develops more valuable strengths.

An HR strategy guides that approach toward tangible outcomes. As a roadmap for workforce optimization, each company’s HR strategy is unique because it’s based on current circumstances and where leadership envisions its workforce in the future. Having a roadmap for achieving goals is important because it gives direction to everyone involved and promotes accountability.

Implementing software increases the chances of seeing the HR strategy through to fruition and achieving goals more quickly because solutions take care of or assist with a particular goal and provide data to track progress.

To explore the right solutions for your HR strategy, check out our HR Software Guide.