What could strategic HRM mean for your organization?

In this article, we explore the potential impact of strategic HRM on organizations. It delves into how strategic HR practices can align with business goals to drive success and competitive advantage.

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Finding suitable candidates and teaching new hires the skills they’ll need for their work used to be HRM’s main task and responsibility. Nowadays, that’s simply not enough to keep your organization competitive. That’s why it’s vital you look ahead and invest in strategic HRM policies.

What is Human Resource Management (HRM)?

HRM plays a crucial role in every organization with a sizeable workforce – recruiting, selecting, evaluating, training, and managing.

Besides carrying out hands-on tasks, such as job interviews and performance reviews, HRM also addresses an organization’s strategic decision-making, for example, drafting staffing policies and training and helping staff with their professional development.

Why solid HRM policies are so important

Solid HRM policies ensure your workforce remains a good match for your organizational objectives and operations – today and tomorrow.

This is actually trickier than you might think, especially in the current labor market …

  • Worldwide staff shortages are making it difficult for organizations to find and retain good candidates, and raw material costs are rising fast. This is squeezing profit margins and making it harder to offer competitive salaries.
  • School leavers don’t have the necessary skills, experience, and qualifications to fill current vacancies, and baby boomers are reaching retirement age.
  • Baby boomers are leaving the workforce and, with them, taking skills and knowledge that younger generations are no longer interested in or are no longer even being taught.
  • Skills required to keep up with rapidly advancing technologies are changing faster than ever before. Skills once deemed essential are now superfluous in the wake of digitalization and automation.

What’s the difference between strategic and conventional HRM?

Conventional HRM generally focuses on filling vacancies within the organization – whenever someone leaves the company, HRM places a job ad and selects the best candidate to fill the role. Simple.

Characteristics of conventional HRM policymaking include:

  • focusing on operational planning
  • filling vacancies
  • being reactive rather than proactive
  • setting short-term goals
  • working to set protocols and operating procedures
  • providing only basic training sufficient to carry out current tasks

Unfortunately, this approach is no longer enough. Companies are facing major staff shortages, and people can pick and choose where they want to work. The balance of power is shifting from employers to employees, which in turn has sparked a war on talent and is prompting companies to implement strategic HRM policies …

  • focusing on organizational objectives (current & future)
  • identifying required skills
  • implementing proactive policies
  • setting short-, medium-, and long-term goals
  • adopting flexible working methods using data and KPIs to optimize policies still further
  • providing specialized skills training aimed at long-term employability

How can strategic HRM benefit my company?

Many companies have discovered that strategic HRM is key to finding and retaining skilled personnel …

  • Finding the best staff – strategic HRM policies involve more than simply placing job ads to fill vacancies. It focuses on identifying and establishing the conditions that attract the best staff to want to come and work at your company.
  • Increasing competitiveness – having and keeping the best staff on board ultimately results in improved product quality and/or service levels.
  • Achieving objectives – by looking ahead and responding proactively to future trends and developments, you’re less likely to be left behind or caught unawares.
  • Reducing staff turnover – keeping staff on board for longer helps reduce ‘brain drain’ and repeat recruitment costs.
  • Increasing predictability – collecting and analyzing objective data over time helps make your HRM policies more predictable, rather than making decisions based on intuition.

Focusing on skills

HRM used to focus on merely filling vacancies, but technological advances are constantly changing the skills needed to function effectively and efficiently. If you don’t help staff upskill or reskill as part of your strategic HRM efforts, eventually they’ll no longer be able to keep pace with the demands being placed on them.

So, the focus is shifting from filling vacancies to attaining and retaining specific skills.

What’s more, if you’re looking to take your staff’s skills seriously and manage them properly, you’ll need to start using skills matrices or special-purpose skills management software.

Get better acquainted with AG5

It’s probably time to start implementing strategic HRM policies if you’re struggling to maintain adequate staffing levels.

And instead of relying on intuition, you can start using objective data. AG5’s skills management software helps you do just that and get a flying start towards implementing successful strategic HRM policies.

  • view all your staff’s current skills, competences, and qualifications at a glance
  • spot in an instant which competences are plentiful, scarce, or missing altogether
  • adjust your training and/or recruitment efforts accordingly

Using special-purpose skills management software, you can accurately map, view, and update your staff’s skills, competences, and qualifications in real time.

Schedule an online demo or find out more about how our skills management software works.

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Original version | March 16, 2022

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