Why Is Strategic HRM so Important for Organisations?

Subject: Employee Management
Pages: 6
Words: 1383
Reading time:
6 min
Study level: College


The world business environment is increasingly becoming competitive and dynamic due to the stiff competition caused by globalization and demand for superior products and services. The dynamic nature of business in the contemporary world has compelled companies to design and implement innovative strategies to avoid being squeezed out of business (Jeffrey 2010, p. 10). To remain vibrant and profitable, most companies have focused on reducing the cost of doing business.

Some firms have invested heavily in technology and sophisticated marketing strategies, with an aim of making more profits. In addition to the aforementioned business techniques, strategic human resource management has become an indispensable tool in many firms. Therefore, the concept of developing and implementing strategies is significant to business success. At present, “many companies are becoming aware that successful human resource policies and practices may increase performance in different areas such as productivity, quality and financial performance” (Brewster 2000, p.12). Therefore, this paper discusses the significance of strategic human resource management (SHRM) to business enterprises.

Employees are the most significant asset in any contemporary venture because they determine success or failure in business. The performance of workers depends on how well they are managed and motivated to execute business objectives. Currently, human resource administration encompasses numerous functions that transcend employment, promotion and development of skills among employees. Strategic management of workers represents a new change in the domain of human resource administration. It focuses on the alignment of workers as to attain competitive advantage (Schuler 2007, pp. 24-25).

The underlying principle of SHRM is that a company can perform better if its workers are managed properly. Effective human resource guidelines and practices enable a company to manage its workers appropriately. Therefore, “strategic human resource management (SHRM) is the creation of linkage between the overall strategic aims of business and the human resource strategy and implementation” (Gratton 2009, p. 96). Some scholars contend that SHRM is a business structure designed to attain sustainable competitive advantage through individuals.

Management guidelines and practices of a company should be in tandem with its plan. The idea of integration involves connecting human resource guidelines with the planned process of business administration. Moreover, the integration of workers into the business promotes dedication and fulfillment of strategic goals. This process is popularly called the “corresponding” model. Conventionally, the expenses linked with the improvement of management plan have been looked upon as an operating expenditure. These overheads should be categorized under investment in assets (Brewster 2000, p. 20).

Facilitating SHRM

SHRM can be facilitated through the following mechanisms. First, it can be facilitated by investing in the development of skills among employees. Development of workers is a significant feature of SHRM. It starts when an organization is hiring and interviewing potential workers. Good interviewing skills can assist in choosing skilled workers needed in company (Brewster 2000, pp. 20-23). After recruiting new workers, a human resource officer should induct them into the organization.

Second, an organization should ensure that its employees have relevant skills required to fulfill its goals. Moreover, a company that regularly trains its employees has a high potential of remaining productive. Third, an organization should clearly state the behaviors needed for its success and should make an effort to encourage and reward them. Last, a company should inspire its workers to attain the prescribed goals and values (Clark & Grant 2010, pp. 212-213).

Motivation of workers can be achieved through introduction of numerous inducements such as promotions and gratuity. It is important to note that it is possible for an organization to sustain the achievement of its goals through SHRM. However, competitors of an organization cannot easily imitate its strategies because the success of organizing workers is often invisible and is called the soft aspect of business (Monks 2000, pp. 56-57).

Importance of SHRM in an Organization

The significance of SHRM in business cannot be ignored because workers are the determinants of success or failure in any organization. In this respect, companies should be able to put into practice well-designed and well-calculated strategic workforce concepts that will be implemented to harmonize and direct the workers into better output. A good human resource strategy should enable an association to forge a cordial relationship with its employees (Clark & Grant 2010, pp. 213-214).

An organization can benefit from SHRM by developing a good plan. A good strategic plan is one that takes into consideration the needs of workers and integrates them with set company goals. When an organization identifies its targets, it should also consider its workers because they are the ones who pursue the set targets and objectives (Monks 2000, pp. 57-58). The human resource division should identify the departments that need labor. The human resource division should take various initiatives to identify and recruit qualified candidates that can assist in the fulfillment of company goals (Monks 2000, pp. 58-59).

The need to be productive in business is a significant reason why a company should make human resource administration an integral business associate. “As an important business partner, human resource management gains support for enhancing skills of employees and training them to meet business objectives” (Wageman 1997, pp. 139-140). This is one of the most effective mechanisms to boost efficiency and engagement of workers because it psychologically prepares them to deal with challenges that may arise in the process of executing business plans (Wageman 1997, pp. 140-142).

In many organizations, the human resource division is often given little attention during budgeting and financial planning. Moreover, the human resource division is often the most affected by budget cuts when a company performs poorly (Wang & Mahoney 2009, pp. 122-123). For example, many firms often downsize their employees and fail to motivate them during financial crisis. If workers are underpaid and frustrated, they can easily fail to achieve business targets. This challenge can be overcome through adoption SHRM, which justifies the need to allocate enough resources to support workers (Wang & Mahoney 2009, p. 125).

For example, a company should allocate enough resources for training and development of workers. In addition, a company should provide competitive remuneration packages to attract and maintain gifted employees. Moreover, a business that lacks skilled workers has limited capacity to achieve its desired goals and can easily be edged out by its competitors (Wang & Mahoney 2009, p. 126).

Proper management practices improve the efficiency of workers and the aptitude of an organization to accomplish its mission. SHRM enables managers to strike equilibrium within the company. However, developing a plan based exclusively on a company’s abilities linked to production and proceeds is wrong because it does not to take into account the role of workers. Therefore, a planned human resource administration creates a wider perspective to the overall management of an organization. A company that makes human resource administration its strategic business associate has a high capacity to make good decisions because it considers the opinions and ideas of the actual employees.

“The value strategic human resource management brings to strategic planning is paramount in attaining organization-wide goals” (Werbel & DeMarine 2005, pp. 247-248). Strategic plans cannot easily be implemented without the contribution of human resource administration and participation of employees. Thus, taking into account the importance of proper management of workers is a significant step in developing organizational strategy. Moreover, implementation of plans requires highly skilled workers. Therefore, strategic management of workers is important for big and small businesses. “By meeting the needs of the employees in a way that also benefits the company, it is possible to improve the quality of staff members” (Monks 2000, p. 70). Giving workers the tools they require to excel also facilitates the realization of set goals.


From this discussion, it is evident that the way a company runs its SHRM has an important connection with its results. The performance of employees depends on how well they are managed and motivated to execute business objectives and goals. Therefore, a company should align its goals with the workers because they are the ones that pursue the prescribed goals. The fundamental relationship between SHRM and business productivity makes it possible for managers of workers to develop strategies and practices that will produce better operational outcomes. Therefore, SHRM is important for the productivity of business, but other contributing factors to business success should not be ignored because they are equally important.


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