Strategic Management and Human Resources?-?Strategy Implementation and Challenges

Introduction

Implementing Strategic Human Resource Management (SHRM) involves embedding human resource practices into the core strategic objectives of an organization. This approach ensures that HR activities not only support day-to-day operations but actively contribute to long-term business success. By aligning recruitment, development, performance management, and employee engagement strategies with organizational goals, SHRM fosters a workforce capable of driving competitiveness, innovation, and sustainable growth.

Unlike conventional HR practices that focus on operational tasks, SHRM implementation emphasizes a forward-looking perspective, integrating workforce planning with the broader strategic vision. This transition requires organizations to adopt a proactive approach, leveraging data-driven insights, fostering a culture of adaptability, and ensuring HR functions are pivotal in achieving overarching business outcomes.

The significance of SMHR in the modern business environment Today, the business environment is changing very quickly and faces challenges such as globalization, technological progress, and diversity of the workforce, so SMHR deals with challenges such as:

• Improving organizational agility means developing a workforce capable of adapting to changes in market dynamics.
• Initiating innovations refers to encouraging talent development and collaboration to solve problems creatively.
• Ensuring competitiveness means attracting and retaining top talent to maintain an edge in the industry.
• Employee promotion refers to aligning individual and organizational goals to improve motivation and performance.
• Proactively address labor laws to reduce risks and improve workforce planning.

Why strategic alignment is important

The recruitment process is not only about filling positions?—?it is also about finding individuals who can help the company fulfill its mission and vision. Strategic human resource management (SHRM) emphasizes aligning talent acquisition with organizational goals. This requires the HR department to evaluate candidates based on their potential to contribute to company goals. Uses analytics and structured assessments to remove bias and identify the best fit for the role. Thinks long-term: recruitment is not only about immediate needs but also about fostering growth, innovation, and organizational culture.

For example, a company seeking to expand into new markets might prioritize hiring employees with different language and cultural skills. Subjective biases, however, can exclude the very talent needed to achieve this strategic goal.

Key aspects of strategic human resources management

Talent management goes beyond hiring the right individuals?—?it’s about providing employees with a clear career development path that motivates them to grow within the organization. When employees are supported and rewarded for their efforts, they feel recognized and appreciated, which increases their sense of purpose. This ties in with psychological theories such as Self-Determination Theory (Deci & Rian, 2000), which suggests that intrinsic motivation is fueled by competence, autonomy, and relatedness. When employees believe their hard work will be rewarded, their engagement and performance improve, leading to better results for both individuals and the organization.

Organizational culture plays a significant role in shaping the behavior, engagement, and overall performance of employees. A strong culture aligned with the company’s mission helps HR attract like-minded talent and ensures employees are motivated to work toward common goals. HR strategies must nurture and promote a culture that supports the company’s values and goals, and in this regard, aligning employee goals with the company’s goals ensures that everyone is working toward the same vision.

HR facilitates this alignment by setting clear expectations, providing the necessary resources, and monitoring performance. By ensuring that individual achievements contribute to the success of the organization, HR helps drive a unified approach to achieving strategic goals.

In a business environment that is constantly evolving, human resources play a key role in managing change. Effective change management ensures that employees are equipped to adapt to new processes, technologies, or organizational structures. HR strategies must include training, communication,n and support systems to help employees navigate the transition and maintain productivity during periods of change.

The role of HR does not end when an employee is hired; it continues throughout the entire career path of an individual within the organization. From onboarding to professional development, HR must support employees through the various stages of their careers to ensure they remain engaged and productive. This includes providing ongoing training, feedback, and growth opportunities. In addition, HR must manage transitions such as promotions or role changes, ensuring that employees are equipped to adapt to new challenges and responsibilities. Maintaining this ongoing support helps employees stay aligned with company goals while fostering a loyal and capable workforce.

Contemporary challenges and?trends

• Digitization and its impact on human resources management: Digital transformation has revolutionized HR practices, automating key functions such as recruiting, onboarding, and payroll. Automated systems, such as artificial intelligence-powered applicant tracking systems (ATS), help HR departments efficiently filter and rank resumes, ensuring that only the most qualified candidates are shortlisted. Analytics enables HR teams to analyze employee data to predict turnover, optimize talent acquisition, and improve employee engagement, it can also help predict employee performance and retention by identifying patterns in data, enabling HR to make informed decisions about training, promotion and even restructuring of the team. This change improves efficiency, saves time, and supports data-driven decision-making, ultimately making HR practices more aligned with organizational goals.
• Flexible working conditions: With the rise of telecommuting and hybrid models, flexible working conditions have become essential for attracting and retaining top talent. Flexible work arrangements help improve job satisfaction, support work-life balance, and increase employee retention. These conditions enable employees to manage their obligations and at the same time effectively contribute to the organization. The shift to flexible working also means that HR must adapt its policies and systems to accommodate a distributed workforce, ensuring that employees remain engaged and productive, regardless of their physical location.
• Managing workforce diversity: As organizations become increasingly global, managing workforce diversity is a key challenge for HR. In addition to simply meeting legal requirements, HR must deal with complexities arising from different cultures, languages and work styles. Effective diversity management includes addressing unconscious bias in hiring, promoting inclusive communication practices, and providing cross-cultural training. HR must also consider how to integrate employees with different needs, such as those related to disability, gender identity, or age, into a cohesive culture that supports the company’s strategic goals. This requires the creation of policies and work environments that enable every employee to feel valued and to contribute significantly, encouraging innovation and collaboration.

From Subjective Hiring to Talent Retention

Modern HR practices should rely on data, structured interviews, and alignment with organizational goals to make sound hiring decisions. However, subjective factors often influence outcomes, leading to potential pitfalls. Overreliance on intuition in hiring, for instance, can result in inconsistent and biased decisions. While an “inner voice” might signal potential red flags, acting without evidence risks excluding highly qualified candidates who align with the company’s mission and vision. A particularly common justification for rejection is the label of being “overqualified.”

This assumption often stems from fears that such candidates will leave for better opportunities, but it overlooks their potential contributions, alignment with company values, and possible long-term commitment. Even if some candidates move on, rejecting them based on assumptions diminishes the opportunity to benefit from their expertise during their tenure.

Additionally, HR responsibilities extend beyond hiring. To retain talent and foster commitment, HR must prioritize supporting and rewarding employees throughout their careers. Psychological research underscores that employees who feel valued and perceive clear growth opportunities are more likely to remain engaged and loyal. Conversely, undervalued employees who feel excluded from the company’s strategic vision often disengage and eventually leave, highlighting the critical need for proactive talent management.

Strategy implementation

HR strategy implementation is a critical phase in which HR translates strategic goals into specific actions that directly impact the workforce and, ultimately, the company’s success. Effective execution is key to ensuring alignment of the HR strategy with the organization’s mission and vision.

For example, if we consider a company that is striving for expansion. The human resources department can implement a recruitment campaign aimed at hiring qualified professionals in new markets or regions where the company plans to expand. At the same time, HR can invest in training existing employees to develop the skills necessary to manage new projects. This strategy is in line with the company’s vision of growth and market leadership. However, for the strategy to succeed, it’s not just about recruiting new talent?—?it’s about creating a work environment that encourages retention and long-term engagement, ultimately supporting the company’s mission of continuous innovation and customer satisfaction.

One useful tool for implementing an HR strategy that can be found in the literature is the McKinsey 7S Framework, which focuses on seven critical elements: strategy, structure, systems, shared values, skills, style, and staff. This framework helps to ensure that the HR strategy is well-rounded and cohesive, aligned with the company’s overall goals.

• Strategy: Ensuring that HR initiatives directly support the company’s strategic goals, such as expanding into new markets or increasing operational efficiency.
• Structure: Organizing the HR function so that it is agile and able to support these strategic goals, which may include decentralizing HR for faster response in a rapidly expanding company.
• Systems: Establishing HR systems for recruitment, performance management and employee development that can be scaled up as the company grows.
• Shared values: Align your HR strategy with your company’s core values to foster a culture of innovation and collaboration that supports long-term success.
• Skills: Assessing current skills within the organization and ensuring HR invests in training or recruitment to fill any skills gaps critical to achieving strategic goals
• Style: HR leadership should create values and behaviors that reflect the organization’s culture, encouraging leaders throughout the organization to do the same.
• Personnel: Believing that there is the right talent, with a focus on recruiting, developing, and retaining the best people who will support the company’s strategic vision.

Thus, implementing a human resources strategy requires a fundamental understanding of the organization’s mission and vision, ensuring that all human resources actions are in line with those goals. Tools like McKinsey’s 7-S Framework help HR departments ensure that every element of their strategy works cohesively to achieve desired results. Continuous monitoring and evaluation are necessary to measure the effectiveness and align it with the growing organizational needs of SMHR. Stakeholder feedback, performance metrics, and organizational change are used to assess the success of HR strategies and to identify areas for improvement. This iterative process ensures that the HR strategy remains relevant and continues to support the achievement of organizational goals.

Case study

1. Google

Google is known for its data-driven approach to HR, especially in its Project Oxygen project. This initiative focuses on improving management practices by analyzing employee feedback and identifying the traits of successful managers. By implementing this data-driven strategy, Google improved its management culture, reduced turnover, and improved overall employee performance. The company continuously aligns its HR strategy with its business goals, ensuring that talent development and management practices directly support the company’s mission to drive innovation. This approach not only attracts top talent but also ensures that existing employees develop in line with Google’s evolving needs.

• Data-driven HR strategy: Google uses a data-driven approach to understand employee needs and optimize HR practices. Through Project Oxygen, the company collects and analyzes employee feedback to assess the effectiveness of management practices. The project focuses on identifying the characteristics of successful managers and areas in which managers need improvement.
• Improving management culture: By using data to pinpoint the behaviors and skills that make managers successful, Google has been able to improve its management culture. The company changed its HR strategies to ensure that leaders were trained and evaluated based on these criteria, which led to more effective leadership throughout the organization.
• Employee feedback: Google regularly surveys employees to gather feedback about their managers. This data is key to understanding what works and what doesn’t in management style, allowing Google to adjust its management practices to better align with employee expectations and needs.
• Reduced turnover: By aligning management practices with employee expectations and fostering a positive work culture, Google has been able to reduce employee turnover. Employees feel supported and valued, which increases job satisfaction and retention.
• Improved employee performance: By focusing on leadership development through continuous learning, Google has been able to improve overall employee performance. This is achieved by ensuring that managers are equipped to effectively motivate and lead their teams, driving productivity and innovation.
• Alignment with organizational goals: Google’s HR strategy is closely aligned with its business goals. By ensuring that talent development, leadership and performance strategies are aligned with the company’s overarching mission to foster innovation, Google creates an environment where employees are constantly challenged and motivated to contribute to the company’s success.

This strategic approach to human resources helps Google maintain its position as a leader in the technology industry and creates an inclusive and dynamic work environment where employees can thrive.

Conclusion

To improve SMHR practices, organizations should focus on the following recommendations: Using technology and data analytics as well as artificial intelligence to make evidence-based HR decisions and optimize talent management. Fostering a culture of growth through the development of programs that reward and support employees throughout their careers, ensuring their alignment with strategic goals. Promoting flexibility and inclusiveness through adapting HR policies to meet the workforce’s diverse needs while maintaining cohesion with the company’s overall strategy.

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I am deeply grateful to Prof. Dr. Aleksandar Gra?anac from the University “Union Nikola Tesla” for his invaluable guidance and collaboration on this article. This work reflects a shared effort and his exceptional expertise.

[References]

1. Review, W. C. (2022, May 2). What Google’s Project Oxygen Reveals about Good Managers. Working Capital Review. https://workingcapitalreview.com/2019/07/what-googles-project-oxygen-reveals-about-good-managers
2. Team, C. (2023, October 15). McKinsey 7S Model. Corporate Finance Institute. https://corporatefinanceinstitute.com/resources/management/mckinsey-7s-model
3. Ryan, R. M., & Deci, E. L. (2000). Self-determination theory and the facilitation of intrinsic motivation, social development, and well-being. American Psychologist, 55, 68–78.