Fundamental Differences between Traditional and Strategic HRM

Human capital is one of the most vital assets of any organization. Workers’ skills and expertise are the leading factors that drive organizational growth and help gain a competitive advantage. Therefore, human resource management (HRM) should take a proactive stance in developing human capital to assist employees in realizing their potential and align their efforts with organizational goals. In other words, HRM should become strategic and future-oriented to add more value to the organization. Further, the core differences between traditional and strategic HRM will be discussed, and the importance of such strategic HRM practices as succession planning and mentoring will be outlined.

Differences Between Traditional and Strategic HRM

The basic concept of HRM incorporates traditional micro-level HR practices that include recruitment, rewards and compensation, performance appraisals, and training. In recent decades, however, a new trend of integrating strategic management processes into HRM has emerged, giving rise to the concept of strategic HRM (SHRM). With SHRM, the HR department shifts from working independently to collaborating with other units, thus aligning its internal practices with organizational objectives.

There are several key differences between traditional HRM and SHRM. The first distinction is the focus of activities: traditional HRM concentrates on individual characteristics, for example, employees’ job performance, while SHRM pays attention to the impact of HR practices on organizational goals and performance (Latifi & Lim, 2019). Second, these concepts differ in the scope of their activities. Traditional HRM adopts a micro-level viewpoint by locally optimizing individual HR practices, while SHRM acts on the macro-level, aligning HR practices vertically and horizontally across the organization (Latifi & Lim, 2019). The third difference is the time horizon: traditional HRM deals with short-term plans and addresses current organizational needs, while SHRM takes a long-term perspective and handles such issues as corporate policies and human resource development (Latifi & Lim, 2019). Finally, while traditional HRM has a supporting role in the organization, SHRM is at the core of the organizational operations, actively collaborating with non-HR units (Latifi & Lim, 2019). Thus, with SHRM, HR managers shift from reactiveness to proactivity and take an active part in organization management instead of simply monitoring the work of other departments.

The importance of SHRM is difficult to overestimate in the current competitive environment. Organizations need to be future-oriented to be able to adapt to ever-changing internal and external conditions. According to Aiko (2021), traditional HRM has a transactional nature directed toward solving current problems. Organizations that focus only on transactional HR processes, such as record keeping or payroll processing, may soon find themselves unprepared for future growth and lagging behind their competitors. In contrast, SHRM adopts a long-term perspective and, therefore, helps businesses develop plans for individual and organizational growth and maintain employees’ job satisfaction and engagement (Aiko, 2021). Hence, SHRM outperforms traditional HRM because it is directed toward the future and turns the HR department into a key contributor to organizational growth and success.

The Need for and Value of Succession Planning

One core function of SHRM is succession planning, which helps businesses prepare for changes in the environment and cope with adversities. Oduwusi (2018) defines succession planning as a method of “preparing employees for promotion in order to ensure continuity of optimal performance when they advance to key positions following departures owing to retirement, promotion, retrenchment or death of incumbents” (p. 1). In other words, this practice continuously supplies businesses with talented and qualified employees who are ready to assume key roles in the company.

Every organization striving for sustainability and prosperity needs succession planning. Leaving this process to chance is not a winning strategy for a company that aims to be competitive in the long term. As Ugoani (2020) notes, some organizations tend to plan their business development and expansion in terms of mergers, alliances, market growth, diversification, and capital, while relying on mere intuition when it comes to filling key positions. What usually awaits these businesses is a high risk of losing their competitive advantage (Ugoani, 2020). This is because a lack of succession planning may lead to employees’ unpreparedness for assuming managerial positions or disruptions in organizational operations due to a sudden loss of a key staff member. Thus, succession planning is vital for any organization and is an indispensable part of strategic HRM.

Succession planning brings several benefits to organizations that effectively apply it. The most apparent value of succession planning is that it aligns the vision of the HR department and the management team and helps avoid staffing gaps. Further, this process assists organizations in taking a strategic approach to employee skill assessment and leadership development (Oduwusi, 2018). It means that businesses can preserve organizational knowledge even when key staff members leave the company due to retirement or for another reason. Moreover, since succession planning involves talent development, it can attract and retain talent and boost employees’ confidence as they build their skills and competence (Oduwusi, 2018). Ugoani (2020) has also discovered that succession planning positively correlates with organizational sustainability. This is because the key personnel is usually responsible for business survival and continuity. Therefore, having a pool of prepared and qualified employees for important positions ensures that they will be able to handle the duties assigned to them. Thus, succession planning has a great value for organizations, contributing to their competitiveness, knowledge preservation, talent attraction and retention, and sustainability.

The Role of Mentoring

One practice that can help organizations in succession planning and talent development is mentoring. According to Blake-Beard et al. (2021), mentoring can be defined as “a process through which an individual (mentee) develops a relationship with a professional colleague (mentor) that typically contributes to the development and career growth of both” (p. 2). That is, it describes a situation when employees with advanced knowledge and expertise provide career support to their less experienced colleagues. Formal mentoring programs are common in many large organizations, such as Johnson & Johnson, IBM, Bank of America, AT&T, Walmart, and others (Ghosh et al., 2019). The success of such programs depends on a frequency of contact between the mentor and the mentee, mutual willingness to participate in a mentoring relationship, the mentor’s acting as a facilitator, and the mentee’s learning from observation (Ghosh et al., 2019). Thus, mentoring extends beyond developing hard skills and involves building a relationship between the participants based on mutual learning and reciprocity.

Mentoring has a significant role for those involved in this process and the organization. At an individual level, mentoring brings such benefits as career advancement and psychosocial support. In particular, Blake-Beard et al. (2021) note that this practice provides mentees with coaching, challenging assignments, protection, role modeling, acceptance, and friendship. At an organizational level, apart from contributing to organizational attraction and career planning, mentoring programs help build psychological capital and improve employee engagement (Ghosh et al., 2019). Hence, as a strategic HRM instrument, mentoring influences key drivers that lead organizations to competitive advantage.

Conclusion

In contrast to traditional HRM, SHRM takes a proactive approach to human resource development and actively contributes to accomplishing organizational goals. One major instrument of SHRM is succession planning, which helps businesses avoid disruptions due to a loss of key employees and creates a stable pool of qualified candidates. Succession planning may be facilitated by mentoring programs that not only improve employees’ competence but also provide them with psychosocial support and increase their engagement.

References

Aiko, A. H. (2021). Relationship between human resource strategies and strategic fit realization: A review of conceptual and empirical literature perspective from Japan. Journal of Strategic Management, 5(2), 8-16.

Blake-Beard, S., Shapiro, M., & Ingols, C. (2021). A model for strengthening mentors: Frames and practices. International Journal of Environmental Research and Public Health, 18(12), 6465.

Ghosh, R., Shuck, B., Cumberland, D., & D’Mello, J. (2019). Building psychological capital and employee engagement: Is formal mentoring a useful strategic human resource development intervention? Performance Improvement Quarterly, 32(1), 37-54.

Latifi, K. A. N., & Lim, S. (2019). Strategic human resource management in the Afghanistan ministry of mines and petroleum: A network perspective. Sustainability, 11(14), 3830.

Oduwusi, O. O. (2018). Succession planning as a key to effective managerial transition process in corporate organizations. American Journal of Management Science and Engineering, 3(1), 1-6.

Ugoani, J. (2020). Management succession planning and its effect on organizational sustainability. International Journal of Economics and Business Administration, 6(2), 30-41.