Strategic Human Resource Management: Harness The Power Of Your People

Unfortunately, even today, I see many organizations fail to take a strategic approach to human resource management.

This means that talent decisions are often knee-jerk and lack proper rationale, so that the organization fails to properly utilize their greatest source of opportunity.

Those that take a strategic approach to human resource management are better positioned to remain competitive and innovative in a constantly evolving business landscape. 

Use this guide to help you understand what strategic human management is, along with tactics, best practices and examples.

What Is Strategic Human Resource Management?

Strategic human resource management (SHRM) is the proactive approach to aligning HR practices with an organization’s long-term goals.

In practice, this means that the various aspects of people management—hiring, performance management, development—are working holistically to ensure the right talent is where it’s needed and that workers are healthy and engaged.

As Wesley Vestal, CPO at CAI, points out “This could be through a more tangible analysis such as ROI and cost-benefit analysis, or less tangible such as the impact on retention or engagement.”

4 Reasons Strategic Human Resource Is Management Important

Strategic human resource management directly impacts an organization's ability to achieve its long-term goals and maintain a competitive edge in the market. 

Here are the main reasons why strategic human resource management is considered crucial:

1. Aligns HR and business goals

The crux of SHRM is to ensure that HR initiatives support overall business objectives. For example, a tech startup planning global expansion will develop a talent pipeline with multilingual customer service reps and salespeople experienced in international markets.

2. Prioritizes resources to drive the biggest impact

According to research by Deloitte, labor accounts for 50-60% of company spending. SHRM helps businesses invest in areas that offer the highest return, such as leadership development or performance-based compensation.

For example, a proper compensation management strategy helps ensure that organizations don’t overpay for talent.

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3. Supports change management and organizational growth

During periods of change—whether it’s a merger, expansion, or digital transformation—SHRM ensures that employees are prepared and aligned with the new direction.

For example, a financial services company undergoing a digital shift provides continuous 

training to its employees, easing the transition to new technology and improving service delivery.

By embedding HR strategy into business planning, SHRM helps organizations maximize their workforce potential, stay competitive, and achieve long-term success.

4. Enhances employer brand to attract top talent

A strong SHRM strategy ensures that companies build a reputation as a desirable place to work for their desired talent.

For example, a healthcare provider known for its leadership training and employee wellness programs attracts top medical professionals, reducing recruitment costs and improving patient care.

5. Promotes legal compliance and ethical practices

SHRM ensures legal compliance and ethical workplace practices by aligning HR policies with labor laws, anti-discrimination standards, and fair compensation rules.

It helps prevent legal risks through structured hiring, workplace safety initiatives, and transparent disciplinary processes while fostering an inclusive and ethical work culture.

For example, a company expanding into new markets ensures compliance with local labor laws by adjusting HR policies for working hours, overtime pay, and termination procedures.

How To Create A Human Resources Strategy

Creating a human resources strategy is an ongoing process that aligns the various HR functions with each other and the overall strategic objectives of the organization.

Creating the strategy requires a deep understanding of the organization's goals, challenges, and the competitive landscape in which it operates. 

For example, my HumansR HR framework is a great tool to help think through the HR Strategy starting from the current state of the organization through the desired objectives while maintaining a focus on the company goals mission and vision.

Some companies streamline HR planning through collaboration with HR outsourcing companies, but some will keep it all internal.

Here's a step-by-step guide to creating an effective HR strategy:

1. Understand organizational objectives

Fundamental to all this is for HR leaders to thoroughly understand the organization's strategic plan, including its long-term goals, competitive positioning, and key business drivers.

With a deep understanding of the organization's strategic priorities and needs, HR professionals can devise and implement initiatives to attract, motivate, develop, and retain talent and ensure the effective functioning and survival of the organization and its members.

In his excellent article on HR becoming a strategic partner, Alex Link recommends that HR professionals should build business knowledge through activities such as stretch assignments, listening to earnings calls, building relationships with other leaders, conducting surveys and interviews, and attending strategy meetings.

Author's Tip

It’s also a good idea to cast an eye to the external labor market to assess the availability of required skills and competencies—other organizations may be coming to poach your workers!

2. Workforce analysis

The next step is to conduct a talent review to assess the current workforce in terms of size, skills, competencies, age, turnover rates, performance gaps, and other relevant factors.

It’s also good practice to gather employee feedback about any challenges they’re facing in the organization and how they’d improve things.

For example, post COVID-19 pandemic, Amex surveyed their workers and discovered that, while most liked the flexibility to work from home, many missed the in-person collaboration.

Using the feedback, Amex launched a hybrid model encouraging employees to ‘come into the office with a purpose’, i.e. make use of office time to collaborate and network.

Under the new model, Amex colleagues can “work from anywhere” for 30 days of the year, 80% can work remotely day-to-day, and 99% are eligible for hybrid work.

Recent feedback found that:

• 90% of respondents were either very satisfied or satisfied with Amex Flex
• 87% felt supported in their career development.

3. Forecast demand for talent

Using your research, predict future workforce requirements based on organizational objectives, projected turnover, technological advancements, employee sentiment, and market trends.

Consider both the quantity and quality of employees needed to achieve organizational objectives.

You should also consider the type of market the talent you need is in. Some industries, like  hospitality, have higher turnover rates than others, so the HR strategy should account for that. 

While consulting for a successful fast food chain, I designed a recruiting process that would create an ongoing pipeline of candidates for high turnover jobs. 

This included writing targeted job descriptions and keeping the job ads open on relevant job boards,  a behavioral assessment focused on measuring skill and alignment to the company culture and values, and training the restaurant managers and senior staff to conduct the selection process locally, allowing for fast growth and scalability.

4. Develop strategies and objectives

Bridge workforce gaps by creating targeted HR strategies with clear goals and KPIs to track success.

For example, a tech company that needs AI engineers to complete key projects sets a goal to increase internal AI talent by 40% within two years through a mix of hiring, training, and academic partnerships.

Plan how new processes and initiatives will be implemented including timelines, responsibilities, and required resources.

5. Assess HR’s capabilities

Review the capabilities of the HR department. Are all the HR pillars developed and is there sufficient capability within the team to meet the new objectives and deliver projects?

What HR software solutions could help and which processes could be improved?

6. Execution, monitoring evaluation, and feedback

Launch initiatives and periodically monitor the implementation of HR plans against set objectives and make adjustments as needed. Collect feedback from stakeholders to inform future HR planning efforts.

Collecting data on the execution of the HR strategy can also provide valuable feedback to the rest of the organization and become a baseline to make major business decisions. 

For example, a company that is evaluating entering a new market may benefit from data on the success of their recruiting strategy.

7. Review and revision

Regularly review HR planning processes and outcomes in light of changing organizational needs and external conditions.

Revise HR plans to ensure they remain aligned with organizational goals and responsive to the dynamic nature of the labor market.

Best Practices For Developing An HR Strategy

There’s a lot to consider when developing an HR strategy. Here are some best practices to help ensure the success of your strategic human resource planning efforts.

• Engage senior management: Ensure that senior executives are involved in the planning process. Leadership buy-in is critical for securing the necessary resources and for cascading the importance of the strategy throughout the organization.
• Use data. Being able to accurately measure key HR metrics such as attrition and retention rates is vital for implementing your strategy. Technology such as HR analytics software can help here.
• Set clear KPIs. Your human resources strategies and initiatives should always be mapped back to your organizational strategies. Likewise, your HR KPIs should be able to articulate how HR professionals are providing real value realization against those same strategies.
• Gather feedback from employees. Great ideas can come from anywhere and employee listening should inform any HR strategic planning process.
• Create a skills library. Many organizations are now moving from a roles-based approach to talent management to a skills-based one. Part of this is building out skills libraries that define what skills mean in an organization and make it easier to track them.
• Deconstruct complex processes. As part of your strategic planning efforts, segment complex HR challenges into simpler, easier-to-implement components. Each component should stack back to the big picture/end goal of what you are trying to accomplish.
• Prep for scalability: Even if you start with a small business HR solution, plan for future expansion. Can you add and onboard new users with ease? Do you have access to a plugins/add-ons marketplace for feature expansion? Can you integrate new software systems easily as you grow?
• Build the right HR team: Make sure you have the right skills and competencies within the HR team to implement the HR strategy. If you do not, ensure to account for time to ramp up the HR function, whether that means hiring new staff or finding external solutions like consultants, third parties HR companies or implementing tools to support the effort! Jaimie Green’s excellent article on building an HR department is a useful resource here.

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