Many considerations go into creating a go-to-market or business strategy. From brand messaging to product roadmaps to sales processes, effective business strategies also rely on the input of lots of people across many departments. Show
Few departments have a better bird’s-eye view of the entire organization than human resources. HR professionals can see both why a strategy exists and how it’s developed and implemented. Yet, too often, HR departments don’t have a seat at the strategy table. Let’s take a look at how HR can help shape business strategy and bring it to life. Why HR should get involved with setting corporate strategyToday, business moves faster than ever—it’s a platitude, but it’s also never been more true. Technologies, industries, and consumers themselves are continually evolving in a digitally-driven market, and companies are continuously shifting their strategic focus to keep pace. This culture of change has a significant impact on people. Every business decision has a real-life impact, and HR departments are specially equipped to inform strategy and help employees navigate the resulting changes. Consider these reasons why it’s so important for HR to align with business strategy:
What role human resources plays in strategic planningSo how does HR become part of the broader business decision-making process? How do HR departments move from a reactive, service-oriented function to a more executive-level, strategic one? It starts with setting clear objectives for the department and strong values for the entire organization. Companies with documented values are less likely to ignore the real-life impact of any strategy shifts or big decisions. Consider these steps as you begin. 1. Align and set your HR goalsThe main strategic role of HR is to create goals to help meet key business objectives. Goals may vary depending on the company’s strategic plan, but focusing on HR fundamentals is an excellent place to start. Here are some areas of HR most commonly affected by broader strategic business shifts. Organizational structureThe way companies are organized largely depends on their current strategic objectives and growth stages. If a company is in a high-growth stage, it may have a sales-driven culture with more sales employees and sales executives in decision-making roles. Mature companies with a retention-focused strategy may hire more customer success roles. See 7 types of organizational structures—along with pros and cons for each—to find one that fits your strategy. Read moreEmployee compensationMaybe current business goals are more focused on employee retention or culture-building. Conversely, perhaps the company needs to cut costs. In either case, compensation structure may be an important consideration. When HR is aligned and informed on these goals, they can make strategic decisions to help the organization meet them. Employee developmentDepending on the business goals and immediate initiatives, it may be necessary to train employees on new skill sets. Some employees may resist additional roles and responsibilities, so the role of HR in these situations is to both evangelize additional training and ensure teams are developed to keep pace with shifting needs. Performance reviewsClear business strategies are also tied to clear KPIs. With HR aligned on these performance benchmarks, it can better evaluate employee performance and provide more actionable feedback during review discussions. Change managementAs a people-focused department, HR often has the best pulse on employee sentiment throughout the organization. It makes sense, then, that HR can act as effective advocates and change agents in implementing business strategy, creating a blueprint employee engagement and success. HR departments can encourage employees to share their feedback on new business strategies or technology investments to ensure any changes or strategic shifts make sense from an operational perspective. 2. Formulate specific actions to hit those goalsOnce you’ve aligned and set goals, it’s time to develop action plans to execute your HR strategic vision. Focus on developing and improving processes for recruiting, hiring, employee development, and performance reviews. When creating an optimized action plan, it’s important to have a clear understanding of your organization’s current structure and identify any gaps or shortcomings in your processes. Where should you invest more in recruiting? If budgets are tight, what training or employee development programs need to be in place to maximize the productivity and effectiveness of your existing talent? How many sales reps does HR need to hire in a specific territory? The ability to visualize where every player fits into the larger organization can help HR departments align employees to business strategy, maximize efficiency, and see data in context to drive better decisions. Org charts and related visuals can help HR departments optimize organizational structure at every level and make better people decisions, such as:
Does your organization needs to hire new talent to meet its strategic goals? See how to develop a staffing plan. Read more3. Track and measure performanceHistorically, the role of HR has lied in the “softer,” people-focused side of the business. However, people analytics are now the new HR, and HR departments are just as responsible for reporting on the performance of their initiatives as any other department. With human resource alignment around data-driven goals, HR leaders can ensure that decision-making not only aligns with strategic business objectives but also helps drive those goals. HR leaders can analyze data from sales, marketing, and accounting to break down departmental silos and better align with overall business goals. Data-driven human resource alignmentAccording to a Bersin by Deloitte study, data-driven HR teams are four times more likely to be respected by their business counterparts, which can result in more input in strategic decision-making. By combining departmental data and HR data and visualizing it all in a single workspace, HR departments can better align their decisions to business strategy. Consider the ways these types of people analytics can impact the broader business: Employee analytics: Measure the performance of all the HR initiatives in terms of cost, time, performance, then use a dashboard to track recruiting times, onboarding speed, employee satisfaction, and employee salaries. This data-driven approach to people management helps HR departments evaluate pay disparities, track employee retention, identify trends, and see critical employee metrics that will provide quick insights for better decision-making.
Talent analytics: Today, effective talent acquisition goes way beyond budget and headcount. HR departments can rely on algorithmic data to quickly sift through deep pools of qualified applicants to attract and retain top talent.
Predictive analytics: Set up indicators to see when an employee is at risk of leaving the company. HR departments can use data to identify risk facts and predict employee churn and how this will affect the company.
Invest in better people planningModern human resources departments manage much more than hiring, onboarding, and benefits. Aligning HR with business strategy can boost employee satisfaction and performance, ensure teams are aligned to help the business achieve its strategic objectives, and increase their influence and decision-making power across the organization. See how Lucidchart helps organizations align employees to a business strategy and drive better decisions. How HR strategy is linked with business strategy?A key component of linking business strategy to HRM is a culture of clear communication and trust within an organisation. When employees are encouraged to become involved in various aspects of the business strategy it develops higher levels of trust and respectability between employees and the management team.
Why is it important for the HR strategy to be aligned with the business strategy?Aligning HR with business strategy can boost employee satisfaction and performance, ensure teams are aligned to help the business achieve its strategic objectives, and increase their influence and decision-making power across the organization.
What is an example of a HR strategy?Examples of strategic HR functions include compensation planning, recruitment, succession planning and employee development.
What makes a good HR strategy illustrate with examples?The HR strategy touches on all the key areas in HR. These include recruitment, learning & development, performance appraisal, compensation, and succession planning. An example of an HR strategy is an HR mission statement and HR vision, with concrete, high-level actions about how to execute on this mission and vision.
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