Strategic human resource management (SHRM) is the alignment of an organization’s human resources with its strategic goals and aims. As such, decisions regarding people are aligned to the goals, mission, and policies of an organization (Kathy & John, 2001; U.S. Office of Personnel Management, 1999). Strategic human resource management is intended to enhance employees’ productivity, and subsequently improve the general performance of an organization. In a broader sense, it is a process that involves designing and implementing a set of internally consistent policies and practices that ensure an organization’s human capital contributes to the achievement of its goals and objectives (Budhwar & Sparrow, 2002; Mello, 2010). It encompasses strategic decisions and actions that are undertaken by an organization’s management with the sole intention of facilitating the accomplishment of action-oriented goals, in a dynamic and competitive business environment. Traditional human resource management entailed day to day management of an organization’s workforce. The concept existed in the earlier, stable and slow business era.
For the management of human resources to be strategic, an understanding of what ‘human’ entails is important. According to Welbourne (2003) strategic human resource management, the human element is more than just the employees or the human capital. The human aspect includes all the human stakeholders of a particular organization (Welbourne, 2003). This is because an organization’s success is not only based on its employees alone but rather even the external human capital. External human capital is important for the long-term success of any business entity (Mello, 2001). Additionally, the external human capital is significant in the sense that it singles out what is most important about human capital. In SHRM, true human capital is in the form of relationships that exist between an organization, its employees, and its external stakeholders. Such relationships must be nurtured through constant negotiations and monitoring to ensure constant engagement, loyalty, and trust (Noe, Hollenbeck, Gerhart & Wright, 2003; Quast, 2000).
Since the mid 1970’s, the global market environments have changed significantly. Today’s market environment is more competitive, unstable and characterized by constant technological innovations (Singh, 2003). Conversion of previous regional and domestic economies such as China and India into global economies has increased competition. As a result, more adaptive, efficient and productive approaches are needed to counter the turbulence in the market. Consequently, strategic human resource management has emerged. Emphasis in SHRM in the last couple of decades has been as a result of growth in markets, professionalism in the business environment and the general need to maintain organizational strength and respect. It entails management of workforce in an ever-changing environment, one that the old concept couldn’t fully comprehend (Mayer, 2008). This new concept focuses more on employee skills and knowledge as the tools for improving organizational performance. Strategic human resource management enhances productivity and effectiveness of an organization and its ability to achieve the set goals and mission. Integration and use of human practices into strategic planning process has made firms achieve their goals and objectives. This is a futuristic approach in that it serves as the lead in steering an organization forward and improves the overall organizational performance. It’s also an important tool for team building in that it concentrates the efforts of individuals into a team. Ultimately, all teams are destined to achieve a common organizational goal or purpose (Chadwick, 2005).
Therefore the rise in SHRM in organizations is rife and is not expected to cease in the near future. This follows an understanding of the fact that for an organization to penetrate its segment market it requires to satisfy the human capital close to it (Kazmi & Ahmad, 2001). In so doing chances of making profits in a highly competitive market are increased. In conclusion, SHRM defines a higher function of the traditional human HRM that; makes decision on what HR approaches to be operationalized in order to achieve the organization’s goals, is more focused on meeting business needs. Chiefly, SHRM finds better means of integrating HR practices and policy in order to ensure profit making.
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