What is strategic human resource management?

A company won’t find success unless the entire team is operating out of the same playbook. Strategic human resource management, also known as strategic HRM or strategic HR, is all about aligning the functions of HR, such as hiring, developing, and supporting employees, with the long-term goals and outcomes of the organization to create synergy between all departments.

Strategic HR goes beyond the normal, everyday administrative communication and duties of an HR department. It involves creating a rational and comprehensive framework that maximizes a company’s human capital by getting HR involved in policy creation from the start. It helps HR function at its best and aids in performance management.

It basically ensures you, the HR pro, have real input in all aspects of the business. After all, a business is made up of people, and that’s what you know best.

In this guide, we share the benefits of strategic human resource management, examples of strategic HR, and how you can implement strategic HRM into your business.

Importance of a human resource strategy

Strategic HR brings a tremendous number of benefits for any organization. And what’s great about these benefits is that they will permeate throughout your entire organization. HR pros benefit, business owners benefit, managers benefit, and employees benefit. It’s a win-win-win-win.

Alignment with business goals

Strategic HR ensures that HR practices, policies, KPIs, and initiatives are closely aligned with the organization’s broader business goals and overall business strategy. This alignment is critical, as it ensures that every HR decision and action contributes to the achievement of the organization’s strategic goals.

Without this alignment, HR could operate in isolation, leading to a lack of synergy and inefficiencies in the organization’s efforts. Strategic HR provides clear communication between HR and every section of the organization to ensure talent is utilized effectively and wellness is maintained.

Talent attraction and retention

A strategic approach to HR can significantly impact an organization’s ability to attract, develop, and retain top talent. In a competitive job market, companies that prioritize strategic HR practices can position themselves as employers of choice.

Employees want to work at a company where they know their needs are being heard and met, no matter what department they’re in. Who wants to work somewhere where no one gets along and where there are constant misunderstandings and conflicts between business teams? The cooperation and effective communication within and across teams will be felt — and appreciated — by employees.

This not only leads to better recruitment outcomes but also reduces turnover rates. Retaining skilled and motivated employees is cost-effective, gives the organization a competitive advantage, and contributes to long-term success.

Performance improvement

Strategic HR management fosters a culture of performance excellence within the organization.

HR helps employees perform at their best by:

• Setting clear employee performance expectations
• Developing metrics that measure employee performance
• Ensuring one-on-one meetings between employees and managers are set with consistency
• Regularly evaluating and providing feedback
• Aligning individual and team goals with strategic objectives, and
• Making sure there’s always room for an employee to grow with the company.

Examples of strategic HRM

Strategic HR is all-encompassing, spreading into every aspect of your business functions. Here are some examples of how strategic HRM can bring success.

Example 1: An employee taking sick leave

An employee notifies their manager that they will be taking sick leave to take care of a family member for six weeks starting next month. With strategic HR in place, this organizational change is brought to HR immediately.

HR assesses the situation and asks questions to determine what’s needed. They then provide a recommendation as to whether or not the employee needs a temporary replacement, if the current team can cover work over that six-week time frame, or if personnel need to be temporarily moved from one team to another to cover the absence.

Once a direction forward is decided on, those involved begin implementing a strategy to ensure a smooth transition. Without strategic HR, these decisions may be left to someone who doesn’t have a complete picture of the situation. Even worse, a decision may never be reached — leaving team members in the lurch once their colleague leaves.

Example 2: A large client signs on

If a company signs a client larger than it’s accustomed to, strategic HR can help to make sure the team and organization are ready for the upcoming wave of work.

Strategic HR means assessing what’s required as soon as possible. This is done through gathering feedback and data from those involved in the project.

What is needed to get the project done — specifically from a personnel standpoint? Is new talent needed? And if so, will they be needed long term or only on a temporary basis? Is it best to hire an employee or pay freelancers? Perhaps it makes more sense to move someone within the company to the project and hire a freelancer to cover their work in the meantime.

There are many ways to move forward. What’s important is that the situation is assessed strategically and that the needs of everyone involved are considered.

Additionally, what other resources will be needed to ensure the team is prepared? Do you need to invest in skill-building for current team members? Will your current software be sufficient, or is an additional investment required?

Creating a strategic HR strategy

A strategic HR strategy is vital to the health and wealth of any business, as it ensures each disparate department communicates and works as one cohesive unit.

1. Assess organizational goals

The first step in creating a strategic HR strategy is to thoroughly understand the organization’s goals — both in the short-term and long-term.

HR professionals must work closely with other departments, leadership and individual employees to identify the specific business objectives, growth targets and challenges that the company is facing. What do business owners, managers and employees hope to accomplish? Are the goals grounded and specific, or are they wishy-washy and unclear?

2. Perform a gap analysis

Once the organizational goals are clear, HR professionals must conduct a gap analysis to identify the current state of the workforce and HR practices.

This involves assessing the skills, competencies, ROI of HR software, and resources available — and comparing them to what is needed to achieve the organization’s goals. Do team members have what they need to optimize their productivity, or are more resources required? Resources could be physical stockroom items, technology (software and hardware), skills and knowledge, opportunities for growth, benefits, wellness programs, and more.

Keep in mind that simply asking a team what they need or are missing is not enough, as they often don’t know exactly what they need to improve productivity and performance. That’s where you come in to find inefficiencies in operations, areas for improvement, and inspired ways to boost employee wellness and satisfaction.

3. Define HR objectives

Based on the gap analysis, HR professionals set specific HR objectives that directly support the broader business goals.

These objectives should be measurable, realistic and time-bound, ensuring that HR’s contribution to the organization can be tracked and evaluated. These HR metrics are invaluable to team alignment and making sure progress stays on track.

Be sure to circle back on a regular basis to make sure the objectives you set are still achievable and continue to align with the business’s goals. During reassessment, you also may find that your objectives do not go far enough. As your strategic HR plan builds momentum and improves organizational processes, you can set loftier goals to ensure you never become stagnant.

4. Formulate a strategy

With the HR objectives in place, the HR team formulates a strategy that outlines the action plan. How will these objectives specifically be achieved? Who will work to achieve them? And what is the timeline you hope to accomplish these objectives within? Be specific.

The HR strategy must encompass all of the various components of human resources, such as recruitment, training, performance management, employee engagement, employee satisfaction, and employee retention.

This means speaking with the employees this strategy will most affect. How does the team feel about their current compensation, benefits, PTO and professional development opportunities? How specifically could any of these elements be improved upon to retain employees and attract new ones?

5. Properly allocate resources

The strategic HR plan must also allocate necessary resources, including budget, technology, and personnel, to support the implementation of the strategy. How, specifically, is this all going to work?

This involves determining which key investments are required for training, talent management, technology systems, and other HR initiatives. Without the necessary funds, the HR strategy will fall flat.

The same is true even if you don’t have company-wide adoption. If those in charge or certain business teams work against the plan or are apathetic toward the strategy, everything will take much longer than it needs to — if you can find success at all. Be sure to illustrate how strategic HR will benefit everyone in the long run.

6. Implement and execute

Once the HR strategy is finalized by HR leaders and approved by business leaders, the next step is to put it into action.

The HR team will work to execute the plan and regularly monitor progress. It will communicate with those involved and ensure everyone is on the same page and aware of objectives, progress, alignment and successes. They will also make adjustments as needed to make sure that alignment with the organization’s evolving needs and market conditions is always maintained.

7. Seek employee feedback

Effective communication is essential during both the planning and execution phases.

HR professionals must ensure that all team members — at every level of the business — understand the strategic plan, their roles within it, and how it benefits them and the organization as a whole.

Are they satisfied with the plan and how it’s being executed? Do they feel their opinion is being heard? Are their needs being met?

Feedback must be collected and given out with consistency for it to be effective. When employees are surprised by questionnaires, evaluations and performance reviews, their backs are put against the wall. Instead, build a culture of feedback across your organization so that it becomes natural and ingrained in your company’s operations.

8. Monitor and evaluate

Defining metrics to monitor, measure, and evaluate the effectiveness of the strategic HR plan is essential to the plan’s success.

Key performance indicators (KPIs) should be established to track progress, and regular reviews should be conducted to assess the effectiveness of HR initiatives. Is a component of the strategy not yielding the predicted and desired results? If so, revise and adapt accordingly.

Learn as you go, and continue to make improvements to your strategy. No matter how successful your strategic HR is, a few years down the line, a completely different approach may be needed.

9. Focus on adaptation and continuous improvement

Key to the success of the HR strategic plan is understanding that it’s not static; instead, it must be able to adapt to changing circumstances.

Change is guaranteed, but business growth is not. HR professionals need to be flexible and adjust the plan as needed to respond to shifts in the business environment and ensure that HR always remains a strategic asset.  

Bottom line

Strategic human resources management is an essential element of every successful business. The HR team’s goals and resources must be aligned with the overall goals of the organization to ensure optimal business performance through effective employee recruitment, onboarding, performance, recognition, and retention.

Let’s review the nine steps to create an effective strategic HR strategy.

1. Assess organizational goals

2. Perform a gap analysis

3. Define HR objectives

4. Formulate a strategy

5. Properly allocate resources

6. Implement and execute

7. Seek employee feedback

8. Monitor and evaluate

Without a talented team operating at their best, the organization’s goals won’t be realized. Get your HR team a seat at the table from the very beginning to ensure synergy and alignment between all departments.

The HRMorning website is filled with tools and resources to help HR pros just like you shine right alongside your thriving team. Check out our categories for recruitment, talent management, and performance management to boost your HR game.