Millie Yun Su
Senior Lecturer at Singapore University of Social Sciences
Research interests: Innovation management, practice-based view, entrepreneurship, qualitative research.
Teaching interests: Business model innovation, strategic management, strategic human resource management.
Title: What is Strategic Human Resources Management (SHRM) and Why Should We Care?
When I first got the job of designing and teaching a course on SHRM, I had no idea what is human resource management (HRM) and the topics involved, not to mention the term, what is exactly SHRM? Shouldn’t all HRM topics be strategic to begin with? After 8-10 months of self-learning and teaching this topic at the same time, I have reflected some key learning points about this topic, why should we care, and whether HR managers should know strategy.
What is Strategic Human Resource Management?
SHRM, by definition, is linking strategic goals with human resource management, or using human resources to improve business performance, enhance organizational flexibility, and develop organizational culture, with the ultimate goal of increase the company’s competitiveness. Traditionally, HR encompasses several functions in an organization, including recruitment and selecting candidates, training and developing employees, engaging and motivating employees, allocating compensation and rewards, and managing employees’ performance. HR also lays down policies and processes on work safety, and any kind of employee welfare in an organization. The difference between HR and strategic HR is that the latter performs a proactive function of involving HR in strategic planning, while the former performs functions to administratively support the company.
Why Should We care about SHRM?
As we are in the 21stcentury, the landscape of work is going through drastic changes that will put SHRM in the center of management. For instance, gig economy allows companies to be flexible with hiring and deployment, but it also raises issues about employees’ welfare and training. How should companies select and train freelance workers for their business models, and how should companies care for the welfare of the freelancers? Freelance workers will not receive the same training as the full-time employees, but how can companies ensure the quality of output they produce, and how should companies integrate them as a part of their labor force?
Singaporean employees have the highest turnover rate, 46%, the highest among the Asia Pacific countries, and the lowest employee engagement rate (72%), compared with other countries like Philippines, Vietnam, Indonesia, and Thailand which have an average of 82%. Multi-generational workforce along with increase population of millennials and Gen Y in the workforce also put pressure on companies’ retention. Senior managers not only have to adapt their work practices but also have to come up with new measures to improve retention.
Last but not least, digitalization of work processes and decision-making, and the increase application of AI and analytics will also change the idea of work. How can companies upskill their employees and help them work smarter with these machines? Singapore government is providing grants and funds for SME employees to upskill, how should companies adapt and reconsider their strategies and business models?
The issues and questions could go on, but they are empirical and practical. Unfortunately, theories of SHRM have been stuck in the 1980’s that are mostly driven by psychology or industrial organization. In order to address these issues about new trends of work, this field has to become multidisciplinary that combines sociology, organizational theory, operation, and strategy in order to stay relevant and practical.
The role of Strategy in Human Resources
After teaching one semester of SHRM to a group of graduating college students major in HRM, I began to wonder how much of strategy do they need to know. Once the students become a HR professional in an organization, do they need to know about the firm’s strategy? Do they need to learn about Porter’s 5 forces, competitive dynamics and competitive advantage, and different types of business strategy and business models? The fundamental question is, what is the role of strategy in HR?
After talking to several HR practitioners, consultants, and students, I have the following conclusion. Business strategy serves as a context in which the HR practices and systems function. While HR professionals could be limited in giving inputs on strategic planning, their expertise will be valuable for execution and implementation, because after all it is the people that are executing and implementing the strategy. For example, suppose a Singapore medical wellness company is expanding to Malaysia, the company’s HR needs to know the company’s expansion strategy in order to come up with hiring criteria and design an effective recruitment strategy.
Strategy offers a context, a frame of reference, to determine the criteria for talent, training and leadership development. For example, if a company is changing its business model from manufacturing driven to customer-driven operation, then HR needs to know this change of business model in order to hire employees with experience in customer service and train employees to become customer-focus. If a company is diversifying its business model from B2C to B2B, then HR needs to design mechanisms that encourage internal employees to communicate and share information effectively and volunteering.
HR professionals need to at least know what is the strategic directions and the competitive contexts in which the firm operates. It is also managers’ responsibility to communicate the business directions to HR so that they can design and implement HR plans that will support the company’s goal. The linkage between strategy and HR should be more explicit, yet the two professions often take each other for granted and ignore one another.
The second part of this series will discuss the change role of HR for the future.
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