Six critical elements are required in growing SHRM within the firm, according to the theoretical viewpoints outlined above.
1. Internal HR staff and structure transformation:
Concern must be placed on the following areas while developing a strategic HRM philosophy inside a company:
a) HR staff transformation
There is a substantial difference in the capabilities required of HR employees between traditional and strategic HRM approaches. Staff in old HRM had to be specialised in certain functional areas, such as training or interviewing for new hires. HR professionals' strategic HRM job is "change management," which entails strategic planning, team building, and having a global perspective. Most HR departments will undergo considerable changes in order to manage human resources from a new strategic perspective.
b) Changing the structure of the organization
It is usual for the organizational unit to restructure while converting the HR structure from traditional to SHRM. The most difficult decision to make when creating a new strategic HRM unit is whether to centralise or decentralise the HR function. The HR function's structure is determined by the type of the company's business, its scale, and its overall business strategy. In some firms, a centralised HR unit might be ideal, whereas in others, highly decentralised HRM might be required. Regardless of which structure is adopted, the crucial ingredient in a successful transformation from a traditional HR function to a modern HR function is communication.
The goal of SHRM is to establish a structure that satisfies the pressing needs of business strategy and allows the HR department to provide services that assist the company in achieving its strategic goals.
2. Increasing administrative efficiency:
One of the major duties of HR personnel, according to Dave Ulrich, is to be "administrative experts." HR staff employees must play an active role in reengineering administrative and other procedures within the firm, as well as finding ways to distribute services more effectively throughout the organization, as administrative specialists. The goal is to improve HR service efficiency while also saving money. To improve HR units' administrative knowledge, a number of processes are required.
The first is concerned with:
- Improving administrative efficiency by assessing the gaps between the "as is" process and what the system "needs to be" and focusing on present processes that can be improved.
- The establishment of consolidated HR services that are shared throughout a business can help improve administrative efficiency.
The final step requires HR personnel to consider how they add value to the company in terms of value perceived by consumers rather than value recognized by the program's provider.
3. Including human resources in the strategic planning process:
HR strategic integration necessitates a strategic planning process and HR managers' participation in that process. The formulation of a strategic plan entails top management reviewing and analysing the current and future state of the organization with the assistance of outside consultants. HR managers should not only be able to influence the generation and selection of information utilised in decision making, but they should also be able to impact decision making to achieve full integration.
4. Connecting HR pratices to corporate strategy and one another:
For HR professionals and line managers, the challenge of aligning HR pratices with company strategy is becoming increasingly crucial and relevant. HR fit refers to ensuring that HR activities make sense and contribute to the organization's goals and objectives. The following are the three aspects of HR fit:
- Vertical fit: This component of vertical fit is concerned with the alignment of HR pratices and overall business strategy.
- Horizontal fit: Horizontal fit refers to the degree to which HR activities are in sync with one another. HR pratices that are consistent reinforce one another.
- External fit: The third consideration is whether HR activities are in sync with the demands of the external environment. HR practice choices are required to ensure these dimensions of fit. The issue is to create internally consistent HR practice configurations that assist the firm achieve its plan and improve its competitiveness.
For the firm's long-term competitive advantage, strategic flexibility and strategic fit are required.
Flexibility is defined as a firm's ability to fulfil the needs of a dynamic environment, whereas fit is characterised as a transient state in an organization.
The following are the two types of flexibility that have been identified:
- Flexibility of resources
The extent to which a company's resources can be used for a range of purposes is known as resource flexibility. It also includes the cost, effort, and time required to transition resources from one use to the next.
- Flexibility in coordination
The extent to which an organization has decision-making and other procedures that allow it to move resources quickly from one use to another is referred to as coordination flexibility.
An effective relationship between HR managers and line managers is required to complete this objective.
5. Creating a working relationship with line management:
Linking the human resource function to the user organization will necessitate significant modifications. The majority of personnel duties are intertwined with day-to-day company operations. New connection mechanisms will be required as a result of the addition of new managerial and strategic activities, as follows:
Step 1: Provide a solid human resource database to the company. These include labor market scanning and social and economic concerns that affect the organization's long-term human resource context.
Step 2: When it comes to human resource management challenges, change senior management's responsibilities so that these issues get the attention they need. Managers must be committed to giving human resource issues the same level of consideration as other areas like finance, marketing, accounting, and production.
Step 3: The line organization's incentive and control systems must be changed to better manage the whole human resource function. At the strategic, managerial, and operational levels, the organization will need to be able to measure the entire performance of the human resource function. This will require regular audits of the human resource function to see how well it is performing in terms of client service.
Budgeting for human resource services must also be adjusted, as some of these changes will necessitate new corporate financing sources.
6. Focusing on the impact of HR on the bottom line and measuring that impact:
The first step in demonstrating how HR contributes to overall corporate success is to determine how to measure HR's performance. The majority of the proposed typologies are based on four core HRM approaches:
- Stakeholder/customer
- Managers, unions, consumers, and employees, as well as suppliers and firm shareholders, are all direct users of HR goods in this method to measuring HRM effectiveness.
- HR impact:
- Human resource units must design a strategic framework for analysing the effectiveness of their services in order to analyse the impact of HR programmes. The strategic objectives for functional units, as well as the human resource actions required to achieve those objectives, should be identified.
- HR programme dollar value:
- The third problem concerns the monetary expenses and benefits of HR operations. HR is evaluated using a variety of dollar-value indices such as benefits as a percentage of total Compensation, return on HR investment, and HR cost per sales dollar.
- Benchmarking HR practices:
- This fourth factor is crucial because it determines the genuine competitive advantage of HR by comparing it to the HR pratices of significant rivals and companies that excel at HR. Benchmarking can take many forms, such as "Internal Benchmarking," which involves a company comparing procedures in one section of the business to those in other internal units. External competitors in the same market are used for "competitive benchmarking." "Generic HR benchmarking" refers to the comparison of HR processes that are similar across industries.
