human resources and business strategy
Posted By: Lucidchart Content Team
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.
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
strategy
Today, 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:
Move in lockstep with the rest of the company: Goals are
always more achievable when there is universal buy-in and
alignment across teams.
Give HR initiatives a strategic focus: In today’s changing
economy, there are countless ways to recruit, train, attract,
invest in, and support employees. But it’s impossible to tackle
every initiative all at once. Aligning with business strategy
gives HR a strategic focus and helps prioritize goals.
Secure the right talent: Good talent is always valuable, but
companies may need to invest in different skill sets or roles at
different times. Understanding the strategic goals of the
business will help HR attract and retain the right talent at the
right time.
What role human resources plays in strategic
planning
So 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 goals
The 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 structure
The 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.
Employee compensation
Maybe 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 development
Depending 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 reviews
Clear 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 management
As 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 goals
Once 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:
Assigning employees where their skills can make the most
significant impact
Making informed decisions about pay, equity, and
performance
Modeling current and future org structures to determine how
best to scale your business
Does your organization needs to hire new talent to meet its strategic goals?
See how to develop a staffing plan.
Read more
3. Track and measure performance
Historically, 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 alignment
According 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.
Benefit: Efficient onboarding, improved employee satisfaction, and
retention
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.
Benefit: Identify and attract higher-quality employees and improve
workforce planning
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.
Benefit: Better retention and employee planning
Invest in better people planning
Modern 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.
