The establishment of Strategic Human Resource Management as an important and significant factor in the profitability and long-term success of an organization has been an arduous and uphill battle. Though significant traction has been gained in recent years, there are still some major hurdles for Human Resource Management. As Stephen Mayer (2008) notes, HRM must overcome the common belief that profitability concerns are at odds with personnel concerns, that HRM is “merely a glorified… version of traditional personnel management,” and that “HRM practices are rooted in bad science.”
In a study produced by the U.S. Office of Personnel Management, Human Resource departments are partially to blame for these difficulties in failing to produce and provide management with statistics demonstrating HRM’s influence on achieving organizational goals (Strategic, 2010). OPM’s study goes on to suggest that in order “to address these shortcomings, HR needs to ask itself what are the HRM concerns that will gain management’s attention, and does HR have the data that can help address those concerns?” The first step toward being taken seriously is developing a commitment to Strategic Human Resource Management, or SHRM.
The Strategic Role of Human Resource Management
Strategic Human Resource Management refers to aligning the policies and procedures of the HR department with the organization’s mission and strategy (DeCenzo & Robbins, 2010). The Office of Personnel Management (2010) study indicates that those organizations that have done this most successfully are those who began the process at the planning stages of organizational goals; this requires developing a close relationship between HR, management and executives. “Strategic planning allows [organizations] to put down on paper where they are, where they want to go, and how to get there.” OPM also notes that once the plan is in place, management must implement the plan while taking actions and measuring outcomes to determine how successful they are in achieving the strategic goals.
There are strong arguments for the importance of adopting a Strategic Human Resource Management philosophy. Studies have shown that firms with high performance practices involving SHRM are substantially more profitable per employee, while at the same time rated higher in employee satisfaction and retention (Mayer, 2008). Industry leading organizations have realized that their human resources can provide a strategic and competitive advantage. “Without attracting and retaining the right people, in the right jobs, with the right skills and training, an organization cannot succeed… Without people, there is no one to do the work for the company” (Strategic). The direct correlation between HR practices and the success of a business indicates the importance of human capital and requires organizations to integrate and align HRM with their overall strategic plans (Strategic).
Executives tend to be “hopeful skeptics” when it comes to SHRM, says Mayer (2008), hoping that HR theories on the profitability of taking extraordinary care of employees are true, but skeptically waiting to see the proof. Unfortunately, HR has historically done a poor job of measuring their effectiveness in supporting organizational goals and profitability. Measuring process and productivity is much easier than measuring whether or not HRM has successfully obtained the “right people, with the right skills, in the right positions” (Strategic, 2010). Wages, benefits, training and other personnel costs are a significant cost to organizations, yet most companies who have yet to implement an SHRM philosophy fail to measure the results of their HRM policies. “Nowhere else can you make that substantial of an investment and not measure the return” (Strategic, 2010).
In order to successfully gain entrance into the C-Suite and the organizational strategic planning process, HRM must become strategic as well; they must develop SMART goals, Specific, Measureable, Attainable, Realistic, and Timely goals that clearly link HRM policy with organizational profitability. HRM must begin to shift its focus toward those activates that assist in organizational decision-making, measure outcomes, and advance collaboration between HR and managers; without these steps, it will probably not be possible to “fully integrate Human Resources Management into the business planning process” (Strategic, 2010). Strategic Human Resource Management does not end with board meetings or planning sessions, but must be carried on throughout all HR processes including employment planning, recruitment and selection.
Planning, Recruiting and Selection
Possibly the most significant influence HRM has upon the success of an organization lies in its employment planning, recruitment and selection process. DeCenzo & Robbins (2010) define this process to include, among other things, assessing current human resources, organizing information into a human resource information system, planning for succession, determining demand for labor, predicating future labor supply and determining where to find workers. HRM must engage in strategic planning in order to ensure that the human resources needed to meet organizational goals are ready and available at the appropriate time.
One of the first steps in employment planning, as laid out by DeCenzo & Robbins, is to conduct a careful job analysis from which meaningful and measurable job descriptions can be developed, and only then should the recruitment process begin. While being careful to meet all EEOC requirements, applicants can be found through a variety of methods including internal searches, employee referrals, advertisements, employment agencies, universities, professional organizations, and even through unsolicited applications. Alternatively, staffing needs may also be fulfilled through temporary help, leased employees, and independent contractors.
After a qualified pool of applicants has been established, the selection process begins. “On its face, most managers would contend that they already engage in selective hiring… The acid test, however, is whether the human resources of a firm represent a collective competency and innovation which propel a firm above its competition” says Stephen Mayor. He goes on to explain that this level of organizational achievement requires SHRM planning and forecasting, “innovative recruiting tactics… [and] a comprehensive selection process which includes assessment tests and background checks [as well as] a cultural immersion process to fully integrate a new person into the firm.” Screenings, interviews and testing play important roles in finding the right people, and so does conveying realistic job previews (DeCenzo & Robbins, 2010). Just as hiring managers need honest information to evaluate applicants, the applicants need honest information as to the job functions and organization’s culture to ensure a good fit.
According to Lisa Isom-Rodriguez (2005), leading edge organizations have launched employment branding campaigns to convey who they are to potential applicants and increase their qualified pool of recruits. She goes on to explain that employment branding cannot be successful if it is only superficial. Simply creating a new website or extending unwanted benefits to employees will not produce the desired buzz. For it to be successful, employment branding must be an “honest outgrowth of the business;” the culture expressed must be the culture that exists throughout all levels of the organization. Once developed, employment branding is a powerful tool that creates excitement in current and future employees, focuses recruiting efforts, reduces turnover, ensures alignment with the organizations goals, and conveys the organization’s commitment to its employees. Isom-Rodriguez states that “Branding has become an essential function in the current competitive climate.”
Future success for organizations requires incorporation of Strategic Human Resource Management into the employment planning, recruitment and selection processes. SHRM must accurately understand current and future human resource needs in order to ensure the viability of accomplishing the organization’s strategic goals (DeCenzo & Robbins).
A few of the most important lessons in regard to HRM are that: human resource concerns are not necessarily at odds with profitability concerns, and can even improve profitability; HRM can contribute to strategic business decisions in a meaningful way; successful recruiting demands careful planning, innovation, and employment branding; and these assertions are scientifically verifiable. Numerous studies have shown the value added to the bottom line through valuing employees and involving HRM in strategic business planning. Like people, organizations are slow to change, but they are also equally motivated by “what’s in it for me.” If organizations are not convinced that taking care of employees is worth doing simply because it is the right thing to do, they are still likely to be moved by the promise of higher returns. This is capitalism at its best.
References
DeCenzo, D. & Robbins, S. (2010). Fundamentals of human resource management (10th ed.).
Hoboken, NJ: John Wiley & Sons, Inc.
Isom-Rodriguez, Lisa. (2005). Is Your Recruitment Brand Leading Edge?. Compensation & Benefits
for Law Offices, 5(2), 2-5. Retrieved from Business Source Complete database
Mayer, Steven PhD (2008). Strategic human resource management: Practices of high performance
organizations. Retrieved from the Innovative Human Dynamics website:
www.innovativehumandynamics.com
Strategic human resources management: Aligning with the mission. (2010). Retrieved from the
U.S. Office of Personnel Management website: www.opm.gov/studies
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