What is Strategic Human Resource Management and how can it benefit your business.

Human resource (HR) management is one of the most important aspects of any company. HR departments are responsible for managing the people who work for the company and can have a huge impact on the company's business performance. 

After all, it is the people who make up a company that determines its success or failure. That's why it's so important to have a good human resources management strategy in place. A good human resources management strategy can be a competitive advantage for many businesses.
15. July 2022  • 8 minute read

What is HRM - Human Resource Management?

Human resource management is the process of managing people in an organization. This includes hiring, training, performance management, and payroll.

Why is Strategic HR management important?

Strategic human resource management is important because it allows companies to be proactive about their most valuable asset- their people. By having a human resource strategy, companies can ensure that they are hiring the right people, training them properly, and managing them in a way that leads to the best possible outcomes.

What are the benefits of SHRM (Strategic Human Resource Management)?

The benefits of SHRM are many, but some of the most important ones are:

Improved productivity

When you have the right people in the right roles, they will be more productive. This leads to increased profitability for the company. Strategic HRM uses the company's human resources efficiently, by creating an environment where each employee feels valued.

Improved morale

Happy employees lead to a better work environment and improved morale. Efficient resource management focuses on having an organizational strategy that understands the vital role of employees' well-being. A thorough understanding of the current HR capacity helps the company's growth and success. This can lead to increased employee retention rates and decreased absenteeism.

Reduced costs

By being strategic about human resources management, companies can save serious money on things like overstaffing, training, and turnover.

The four main components of Strategic Human Resource Management

Clear strategic planning

When planning a Strategic Human Resource Management initiative it is important to clarify the business objectives. You should therefore ask yourself the following questions: What is needed for the HR strategies goal to be achieved? How can the HR professionals help in realising those HR strategy goals? What are the risks and challenges associated with the strategic HR goal? What is the time frame for achieving the strategic HR plan? All of these questions need to be answered before proceeding with the setup of your strategic HR department. Proper planning will make it easier to implement the strategy and avoid any potential problems in HR departments.

Designing and Implementing HR Programs and Policies

After the strategic HRM goals have been clarified, it is time to determine what HR techniques, programs and policies will be needed to support those goals. Some examples of programs and policies that might be needed are recruiting and selection, performance management, training and development, compensation and benefits, and employee relations.

Once the programs and policies have been determined, they need to be designed and implemented. This is where the rubber meets the road and where Strategic Human Resource Management starts to have an impact. The programs and policies need to be designed in a way that will support the business goals and be effective. They also need to be implemented in a way that is fair to all employees.

Staff development

The next step in Strategic Human Resource Management is to develop your employees in order to improve business performance. This can be done through training and development programs. These programs should be designed to help employees reach their full potential and contribute to the company's long-term plans.

Employee training also leads to better key performance indicators (KPIs) for the company. When employees are properly trained, they are more likely to be productive and have a positive impact on the business.

Evaluate and Adjust - Performance Management

The final step in Strategic Human Resource Management is to evaluate and adjust. This is done through performance management. Performance management is communicating a clear image of expectations for employees. Then HR managers measure employee performance against those expectations. Adjustments are made as needed to ensure that employees are meeting the expectations. Performance management highlights grey areas where employees need more improvement and also shines a spotlight on top performers.

Key strategies that companies can use to improve their human resource management

Hiring the right people

This is perhaps the most important strategy, as it is impossible to be successful if you do not have the right team in place. The best way to hire the right people is by having a strategic HR planning the process. A strategic approach is to create a detailed job description that uses then uses a variety of assessment tools to identify the candidates who are the best fit for the position.

Training and development

Once you have hired the right people, it is important to invest in development. This means providing employees with training that will help them be successful in their roles and giving them opportunities to grow within the company. An invested human resources department can easily address employee weaknesses and offer solutions that benefit employee engagement and help the company's growth.

Performance management

Operational and strategic management is all about setting clear expectations and then measuring and evaluating employees' performance against those expectations. This process can help identify areas where employees need improvement and identify top performers who should be rewarded for their achievements. Strategic human resource services create a competitive edge by helping in retaining employees and ensuring organizational success.


Payroll is a critical function of human resource management, as it ensures that employees are paid on time and by their contracts. Competitive pay can be a driving force for employees' ambition and motivation. By being strategic about payroll, you can ensure that your company attracts and retains the best talent.


Communication is essential for any organization, but it is especially important in human resource management strategy. This is because effective communication can help ensure that everyone is on the same page and working towards the same goals. Good communication can also help build trust between employees and management.

Five steps to developing a Strategic Human Resource management plan

Step one: Recognize future HR needs

The first step is to take a look at the company as a whole and try to identify any areas where HR might be needed in the future. This can be done by looking at things like financial projections, changes in the industry, and new technologies that might be adopted.

Step two: Look at current HR capabilities

The next step is to take a look at the HR department and see what they are currently capable of. This includes looking at things like staffing levels, budgets, and programs that are in place.

Step three: Figure out what is in the gap between current capabilities and future needs

Determine where improvements can be made, by looking at the gap. Gaps may arise in areas such as resource allocation, capability, procedures, and policies. Once you have identified the areas where improvements can be made, you need to classify the gaps.

Step four: Formulate strategies for the gaps

The fourth step is to come up with strategies that will help close the gaps. This can be done by looking at things like organizational changes, process improvements, or training and development programs. Then the gaps will have different strategic importance, therefore they need to be prioritized. To ensure rapid progress it is also important to consider a budget allocation, this will help to have a clear idea about prioritization.

Step five: Implement, share the strategies and monitor progress

The final step is to implement the strategies, share them with the relevant stakeholders, and then monitor the progress. This will help to ensure that the human resource strategies are effective and that they are achieving the desired results. It is also important to keep in mind that the strategc hr services may need to be adjusted as the company changes and grows.


Strategic Human Resource Management is a process that helps companies plan for the future by taking into account the current state of the HR department and the company as a whole. This process can be helpful in identifying areas where improvements can be made and formulating strategies to close any gaps. 

By following the steps in this article, your company can be sure to have a competitive edge when it comes to attracting and retaining talent.

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Berry van Waarden
Head of Marketing

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