Strategic Human Resource Management: How to Use This for Business Success

In a late 2023 study by Gallup, only 33% of employees claimed to be engaged in their role. That’s a worryingly small number. Engaged employees are the lifeblood of your business, buying into your values and working toward the goals your company wants to achieve.

Your HR team actively contributes to employee engagement and satisfaction, recruiting top talent and organizing payroll and benefits. Strategic human resource management can streamline day-to-day processes, boost productivity, and increase employee engagement.

Our guide on strategic human resource management and how to effectively introduce one can help you get started. From key metrics to factor into your strategy to what’s important and must be included, read on to better understand strategic HR and its benefits.

What is strategic human resource management?

Strategic human resource management is when a company’s HR functions meet its long-term corporate objectives. It’s not just about the day-to-day admin or communications with employees. Instead, strategic HR marries that position’s role as we generally understand it with the organization’s standards and practices. It’s an important reason why you should work to create a global HR strategy.

Effective strategic human resource management ensures the alignment of processes, goals, and day-to-day people management. The key takeaway? Strategic human resource management contributes directly to business success on multiple levels.

Why is HR strategy important?

Strategic human resource management is important because its implementation significantly contributes to your organization’s overall success.

A sound HR strategy is the glue that holds a company together, ensuring that all departments within a business communicate and work effectively. It does this by undertaking employee evaluations and establishing the steps they need to take to raise their value in the business.

Ignoring or neglecting your HR strategy isn’t just inconvenient—it could be destructive. Employee conflict, reduced productivity, staff turnover and impacted performance are just the tip of the iceberg regarding the impact of a poor HR strategy.

But let’s not dwell on the negatives. What about the benefits that strategic human resource management can bring?

8 benefits of strategic human resource management

Increased job fulfillment

An effective HR strategy can improve your employees’ daily outlook. eNPS scores have reduced in recent years by 9%, suggesting that strategic human resource management that targets employee satisfaction is essential. Happiness at work isn’t just a win for your employees either—research from MIT suggests that health and happiness are a fundamental factor in people’s decisions to remain in (or leave) a job.

Improved working culture

Company culture breathes life into your business, and a positive culture amongst colleagues can help your company thrive. Company culture encourages engagement—something that should be a key concern for every HR expert.

Engaged employees are efficient, productive, and switched-on. Gallup’s report also notes that only 33% of employees claim to be engaged at work, so there’s a need for change across the US market. An effective strategic HR plan could solve some of these problems.

Better rates of customer satisfaction

Engaged employees offer a better service as they buy into the business focuses, the products they’re backing, and the dream being sold.

Research by Gallup found that engaged employees resulted in a 10% increase in customer loyalty. Employees who are looked after by strong strategic human resource management will encourage better rates of customer satisfaction.

Efficient distribution of resources

Strategic human resource management can lead to enhanced efficiencies and improved resource distribution. Time and focuses are delegated as needed across teams in a way that makes sense and feeds into the wider business strategy.

Engaging employee management

This type of approach can offer a more engaging way to manage employees. They will be made aware of the end goal of the strategy and the part they have to play, helping them feel connected to wide business values. They’ll also be able to see the impact their work has and the benefits that, therefore, come from it.

Enhanced productivity

Good strategic human resource management results in enhanced productivity. Something that every business strives for. Satisfied and engaged employees will naturally be more productive as they support the business values and what their work is contributing to. Again, Gallup’s recent study supports this as it found that businesses with higher rates of engaged employees saw an increase of 18% in productivity (sales).

Bigger focus on corporate objectives

The values your business created are there for a reason—they’re the lifeblood of what you do. Strategic HR can help you align this vision with the everyday operations of your business making sure everything points in the same direction. The overall objectives and KPIs your business is aiming for can be met more easily with strategic HR and the values your team are held to.

Happy, engaged employees get things done and enjoy the results. But it’s not just about the business, engaged employees are typically less stressed and have higher hopes for the future.

Increased leadership buy-in

With a strategy in place, leadership can buy into the overall aims of the business and have something to work from and refer to. This allows them to do the hard work for you when it comes to encouraging engagement from team members and motivating them to follow new policies.

How to create a HR strategy

Executives want human resources leaders who operate as strategic business partners.

Strategic HR is most beneficial when it aligns HR activities with organization-wide business goals. A robust HR strategy begins with a long-term analysis of your company and the macro environment, then applies key findings to all areas of HR business operations.

For example, your strategic planning should answer questions such as:

• Where are we spending our time—and how can we optimize our operations?
• Do leaders trust us as a resource when difficult situations arise?
• Is our voice heard when executives are assessing future business plans?
• How are we attracting and retaining the top talent our business needs to thrive?

Remember:  The only constant in life is change, and that’s never more applicable than in a working environment. Typically, achieving strategic HR initiatives is a long-term plan. But that doesn’t mean it is set in stone. You should regularly evaluate and adapt with flexibility by updating your strategy to fit the organization better and other external factors.

Here are five tips for how HR professionals can earn respect in their companies’ strategic activities:

Brush up on business competencies

Before you can start contributing to an HR strategy, you need to understand how strategic business works. Familiarize yourself with your business competencies and the requirements your HR team need to support. Your strategy should support the teams selling the services or products the business offers to ensure an advantage over competitors.

Business leaders depend on collaboration in developing their business strategies, and that’s where you can step in and show off what you know.

Track important HR metrics

Data has never been more important, we track everything from our steps to our screen time to how many hours we work on projects. Using data to keep us on track and informed has simply become ingrained in us. Our recent report notes that teams that use data effectively are 10x more likely to produce effective insights for leadership.

Data is a key tool in HR, and it’s important to identify the key metrics you want to track as part of your strategic human resource management goals.

The metrics you focus on should align with your goals. So, suppose you want to improve efficiencies in your business and boost productivity. In that case, implementing a strategy that focuses on tracking the time spent on tasks and deliverables is something to consider. We’ve identified 29 key HR metrics to consider monitoring in our in-depth guide to help you get started.

Combine business and HR metrics

By doing this you’ll be able to evaluate whether the organization has the resources, manpower and support to implement different strategies. HR professionals who regularly perform this activity are much more strategic and effective since the recommendations that come from this type of analysis bridge HR with the broader business goals and strategy. This is the essence of strategic human resources management.

Comply with rules, laws, and regulations

You can give strategic insights and work with leaders in strategic areas but don’t forget administrative responsibilities and compliance with rules, laws, and regulations.

If they’re not under control, the analytics and assessments you worked so hard to get noticed for will go unmanaged and could become a stumbling block. You must continue to innovate basic administration while providing strategic input to reach your full potential in HR.

Getting started with strategic human resource management

Recognizing the benefits of strategic HR is step one, but you still need to implement your own HR strategy. There are a number of strategic human resource management examples that could inspire you, but that’s only one piece of the puzzle.

Remember, before you do anything, you should take time to contemplate your business values and how your strategy can align with them. Consider how your practices could impact employee engagement while bolstering your business objectives.

The key goal is executing an HR strategy that improves efficiencies, boosts engagement and leads to overall business success. While that may feel like a lot, you don’t need to do it alone—get HR assistance from the experts at BambooHR.

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