The Marriage Between Strategic HR Management And Business Performance

The journey to everlasting love

A very common scenario most managers encounter day in, day out is this: “Another resignation? What’s going on? I need people to run this organisation. Anything wrong with our HR (human resources)? Please get the HR manager to look into it immediately. I need to show figures to our shareholders. Time is money.”

Every problem is a HR problem. And I believe all HR managers are trying their very best to overcome and meet the business leader’s expectations. I, myself, am no exception to it.

One of my key HR performance target is to design a strategic HR management (HRM) system that strikes a balance between the organisation, employer and employee, which will then enhance business performance. It’s a huge expectation, and sometimes I wonder if it’s achievable.

Few questions came to my mind. How it is to be structured? What do we include in designing HR processes/practices? How can HR services be delivered to meet the leader’s expectations?

HR reality check

Looking into the different social demographics and practical realities, at present, I find that there is no distinct style of HRM practice that can be clearly identified as a one-stop “HRM solution” to people management and business success.

It is increasingly acknowledged that human capital is a valuable resource for business success and a source of competitive advantage.

Firms employing strategic HRM practices that are internally consistent, strategically aligned and compatible with business strategies are believed to result in superior performance.

Thus, to properly evaluate the effects of strategic HRM practices on business performance, it is vital to capture these interactive effects by treating an organisation’s strategic HRM practices as a holistic system.

By doing so, the role of strategic HRM in maximising its performance will become increasingly important, challenging and cost effective to most organisations.

However, the designing of effective strategic HRM practices is a complicated task. There is little consensus among HR practitioners as to what constitutes “best practice” in such a system.

In reality, till today, there is no single agreed, or fixed list of strategic HRM practices or systems that are used to define or measure HRM effectiveness.

Strategies to counter challenges

Globalisation, competition and mobilisation of talents have given great challenges to most HR practitioners in determining the most effective combination set of strategic HRM practices that will lead to greater business performance.

The ideal composition of strategic HRM practices must meet the following criteria in order to support business performance and achieve competitive advantage:

1. These practices must complement each other.
2. These practices must be cost effective, and resources must be available in the organisation.
3. The design of strategic HRM system must be aligned with the organisational mission, vision and culture.

The business leaders have considerably emphasise on the importance of integrating strategic HRM practices and business strategy for cost reduction, innovation, and quality enhancement that lead to business sustainability and success.

It is likely that senior management team recognises the business leaders’ HR philosophy and the importance of strategic HRM practices. However, many ignore the implementation of these practices due to constraint of resources and talent to execute them.

While acknowledging that these practices serve as a value-creating function on business performance, there are issues still unresolved on how we treat strategic HRM–performance link and how the two are paired.

The big question is how HR practitioner counteract this dilemma? Can the ‘marriage’ between strategic HRM and performance be realised? Will the marriage last? This is a quest to all HR practitioners out there to solve this mystery.

In my personal view, HR practitioners need to understand the role of strategic HRM practices in the organisation and its link with business performance. By doing so, HR practitioners can design strategic intervention that will bring closer collaboration and better HR knowledge sharing among members of the organisation.

Besides meeting organisational goals, the main role of strategic HRM is also to serve employees, their team, their department, and their organisation to perform better.

That means HR practitioners must ensure that there is a direct connection between the strategic HRM policies, practices and services in meeting the business needs.

HR department should champion superior performance philosophy. Instead of helping and serving employees, HR should be developing, supporting, empowering, engaging, encouraging, and enabling employees.

By doing so, HR department will earn a “seat” at the table and be a strategic partner to business planning and growth.

Apart from that, HR department must also drive HR initiatives that are aligned with other general strategies in the organisation that is feasible in attaining the business goals.

What now?

It is clearly time for a quantum leap in the HR field, and HR practitioners can support these transitions by showing strong HR leadership, HR future-oriented thinking, flexibility and creativity of strategic HRM practices, and delivering HR value in tomorrow’s organisations.

Is the HR profession moving fast enough to acquire such roles? Yes. Business leaders recognise the “people are important and business needs people” notion. Therefore, business leaders give much attention to HRM knowing that HR department represents the discovery of people and is an integral part of the organisation value chain.

Such recognition has defined what the future holds for HR field, in terms of HR professional competencies and HRM philosophy and values can bring to the organisation.

Parting thoughts

I can very much conclude that a proper employment of strategic HRM practices will be helpful and useful to improving business performance.

It is thus crucial for the HR manager to remain committed to the development of effective strategic HRM systems by focusing on the implementation of configuration of these practices within the firm’s resources.

Senior management team also needs to assume responsibility of the increasing array of available practices that are essential to make better HR business decisions.

In order to achieve the desired blend of a happy marriage between strategic HRM and business performance, the relationship has to be sincere, unique, personal, and romantic for the ‘couple’ to achieve everlasting love.

Loo is group HR manager at Beacon International Specialist Centre. He has great passion on employee engagement, talent spotlight, HR intervention programme and people development subject matters. To engage with him, please email us at editor@leaderonomics.com. For more HR Talk articles, click here.