81 The Changing Role of Strategic Human Resource Management in Principles of Man
81 The Changing Role of Strategic Human Resource Management in Principles of Management
Learning Objectives
- Understand how HR is becoming a strategic partner.
- Understand the importance of an organization’s human capital.
- List the key elements of SHRM.
- Explain the importance of focusing on outcomes.
The role of HR is changing. Previously considered a support function, HR is now becoming a strategic partner in helping a company achieve its goals. A strategic approach to HR means going beyond the administrative tasks like payroll processing. Instead, managers need to think more broadly and deeply about how employees will contribute to the company’s success.
HR as a Strategic Partner
Strategic human resource management (SHRM) is not just a function of the HR department—all managers and executives need to be involved because the role of people is so vital to a company’s competitive advantage. In addition, organizations that value their employees are more profitable than those that do not. Research shows that successful organizations have several things in common, such as providing employment security, engaging in selective hiring, using self-managed teams, being decentralized, paying well, training employees, reducing status differences, and sharing information. When organizations enable, develop, and motivate human capital, they improve accounting profits as well as shareholder value in the process. The most successful organizations manage HR as a strategic asset and measure HR performance in terms of its strategic impact.
Here are some questions that HR should be prepared to answer in this new world.
- Competence: To what extent does our company have the required knowledge, skills, and abilities to implement its strategy?
- Consequence: To what extent does our company have the right measures, rewards, and incentives in place to align people’s efforts with the company strategy?
- Governance: To what extent does our company have the right structures, communications systems and policies to create a high-performing organization?
- Learning and Leadership: To what extent can our company respond to uncertainty and learn and adapt to change quickly?
The Importance of Human Capital
Employees provide an organization’s human capital. Your human capital is the set of skills that you have acquired on the job, through training and experience, and which increase your value in the marketplace. The Society of Human Resource Management’s Research Quarterly defined an organization’s human capital as follows: “A company’s human capital asset is the collective sum of the attributes, life experience, knowledge, inventiveness, energy and enthusiasm that its people choose to invest in their work.”
Focus on Outcomes
Unfortunately, many HR managers are more effective in the technical or operational aspects of HR than they are in the strategic, even though the strategic aspects have a much larger effect on the company’s success. In the past, HR professionals focused