Sakib Khan

A lot has been said over the years about the need for HR to become strategic, or more popularly, have a seat in the table. But what does Strategic HRM (SHRM) actually mean? What’s the significance?

To start with, SHRM is more than just slapping the word ‘strategic’ in front of typical HR functions like recruitment, retention, pay or learning and development. This is a rather narrow view and fails to capture the underlying concept of SHRM. In broad terms, strategic HRM is a process where organizations HR practices are designed and implemented to complement the overall business strategy of the firm. i.e. SHRM operates with an eye always on the organization’s end objectives.

As you might have noted, I mentioned SHRM as a process. This is important. As Boxall and Purcell discuss in their widely acclaimed book titled Strategy and Human Resource Management, strategy is not a one-off long-term plan; its a process where organizations continuously make strategic choices from a range of available options. This concept of strategy as process is critical to HR, since HR, like any other business functions works in a dynamic socio-political context and there is always a need to reinterpret situations and readjust to the constantly changing environment. And this has been acknowledged by studies where it was found that most high performing firms attributed their success to flexible and responsive short-term strategies, the so called ‘emergent strategies’, rather than sticking to long-term planning. Such strategic management process means that firms are better in responding to unstable environments and able to react when it is most needed.This is especially true if we take the current volatile markets in consideration; today’s full-proof strategy might very well be obsolete tomorrow. To survive, and better still, to sustain competitive advantage firms need to be always on their toes.

Now let’s see how HR strategies can actually be aligned with or complement firm’s business strategy [this concept of alignment is generally known as 'vertical fit']. Say for example, your company’s overall business objective is to achieve sustained competitive advantage in a specific market segment by constantly pumping out new products that none of your competitors currently offer; i.e. the firm is adopting a strategy of innovation and product differentiation. So in this case, HR’s strategy will be to create and nurture a work culture where among others, employees are given more discretion, encouraged to take risks, exercise creativity, work collaboratively and share new ideas for which they are rewarded accordingly.

That means HR strategy is working in tandem with company’s market strategy. And for that to happen, your HR decisions, no matter how small or big they are, have to be directed to that strategic goal. As it has been said earlier, strategy is not a one-off policy document that senior management prepares only in the boardroom. Those days are long gone. It’s very difficult to survive with such strategic concepts nowadays. While taking strategic decisions, you have to be flexible, agile and make the most of the human and social capital of your institution through a participatory approach.

Another important point to note before I finish off, organization’s HR strategies are not always homogeneous. Various HR systems work simultaneously within the organization and thus there can be different HR strategies in action at any given time and context. For example, your retention strategy for head office senior management will not be the same as retention strategy for showroom salespersons. Two group of employees, albeit working in the same organization, operate in two very different contexts and so the strategies need to be tailored.

In coming weeks I plan to talk about some other relevant topics on strategic HRM such as strategic models, high performance systems, employee voice, best practice and best fit debate etc.

Better stay tuned!

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