The importance of strategic human resource management

Where once the human resources department was focused solely on recruitment and staff training, it has now emerged as a powerhouse, capable of leading an organization into what has become a challenging, fast-moving, digital-first business landscape. Forward-looking organizations are giving their HR leaders a seat at the boardroom table and the ear of the C suite, enabling them to take a more proactive approach to human resources – strategic human resource management.

Strategic human resource management connects people with organizational goals

With strategic human resource management, the HR department is building the link between an organization's most valuable asset – its people – and the strategic direction of the company. Strategic human resource management is directly concerned with growing the business, adapting organizational culture in line with today's workplace and developing competitive advantage.

Although it sounds like a simple objective, growing a business has become ever more difficult in light of several emerging trends – competitive labor market, digital disruption, and social change. But this is where strategic human resource management comes into its own.

Building a balanced and change-ready workplace

As organizations embark on digital transformation projects they need a workforce that's equipped to work effectively in this new environment. An interesting Forbes article makes the point that HR managers have "the ability to grease the wheels to ensure employees are able to change more rapidly". Learning and development initiatives will be instrumental in bringing employees up to speed on innovation and change in the workplace. This change-ready workforce will, in turn, be well placed to embrace digital transformation and in some scenarios even inspire or lead change themselves.

Corporate culture has hit the headlines repeatedly over the past couple of years in light of gender equality and the #metoo movement. In the midst of this cultural awakening, the role of the human resources team has never been more strategic. Balancing the workplace and eliminating friction can have a positive impact on staff retention figures, but more than that, a McKinsey report concluded that firms in the top-quartile for gender diversity on their executive teams are 21 percent more likely to have above-average profitability.

HR leaders have identified their chief areas of focus for 2019 as building critical skills and competencies for the organization, strengthening the current and future leadership bench and improving the employee experience.

Getting the right people in place at the right time

We've already mentioned how important it is to equip today's workforce for the digital workplace, but equally important is to have the right leaders at an organization. The Gartner survey revealed that 47% of HR managers said their organization struggles to develop effective leaders, 45% reported their leadership bench lacked diversity and 45% said their succession management processes didn’t yield the right leaders at the right time.

Rather than reacting to vacancies at the leadership level, strategic human resources management is about being proactive. Strategic HR managers will assess the organization's goals and take early steps to get the right people in place. This critical difference between reactive and proactive can play a vital role in an organization's ability to identify change and embrace innovation and avoid being 'Amazoned'.

Developing employee engagement

Today's workforce is less engaged than any previous generation. Gartner's Global Talent Monitor reveals that just 8% of the global labor force reported high discretionary effort (going above and beyond at work) and a high intent to stay at their job.

Effective strategic human resource management can take on these record low engagement levels with clever initiatives. Software company Intuit, for example, launched its Spotlight program which shines a light on employees who have stood out for some reason – performance, dedication, innovation. The employee is rewarded through gift cards or charitable donations in their name. Notably, a study conducted by the Stanford Graduate School of Business showed that 93% of employees felt that receiving Spotlight awards helped to motivate them to maintain a high level of performance.

In many ways, strategic human resource management can deliver a significant competitive advantage to an organization. Demand-driven recruitment, a gender-balanced workplace, high employee motivation, and a strong leadership team all combine to create an organization that's ready to embrace change.