Strategic Human Resources Management: Charting the Course of HR’s Role in Your Organization

In 2015 the University of Michigan published results of a study that looked at what impact HR competency has on business performance. They did the study repeatedly over the course of about 16 years, and this is what they found:
If HR really wants to impact the business, they have to show strategic contribution.

What is Strategic Human Resources Management?

There are 6 key areas where HR contributes to the overall strategic business plan, but rarely does.

  1. Market Trends. Human Resources planning can only be effective in meeting organizational goals if it can match its strategic plan to the strategic plan of the company. The first piece to that is knowing what market trends the organization is dealing with.
  2. Key Business Metrics. It’s critical to look at the effect HR has on the key organizational goals of the company. Perhaps HR needs to conduct a gap analysis that will determine what organizational development initiatives will impact business strategy?
  3. Financial Analysis.
    When it comes to financial analysis, one of the most important questions to ask is: how is HR measuring its impact on the company’s financials? I’m not convinced that HR is always looking at the right financial metric when it comes to measuring impact on business financials.
  4. Environmental Changes. What’s happening in your workforce and your industry that might be impacting your ability to attract, retain, and motivate talent? Look at environmental changes in terms of its impact on your organizational goals and business strategy.
  5. Customer Feedback. HR often fails to look outside of their company to see what drives customers to do business with their particular company. But that’s critical knowledge for an HR person that affects how we recruit, retain, and motivate.
  6. Competitors. HR must understand the business’s true competitors. Where are you better? How can you maintain that advantage? Where are you behind? How can you bridge that gap?

The rest of the executives in any organization are concerned with these 6 items, HR needs to be concerned about them too.

Why is HR Planning Important?

71% of CEOs believe their employees are the most important factor in their company’s economic success. The HR planning process is simply the process by which organizations determine how to properly staff to meet business needs and customer demands. Despite the need, nearly a third of HR professionals say their departments need to improve strategic alignment!

Benefits of Strategic HR Management

According to SHRM, the closer the alignment between HR and an organization’s overall business strategy, the better the company’s ability to anticipate and respond to customer needs and maintain competitive advantage. Research, planning, and development involving workforce culture, behaviors and competencies promote the successful execution of business strategy.

What are the Objectives of Strategic HR Management?

Strategic HR management is developing a culture that aligns with company goals. This includes designing systems to help the company attract and retain employees that fit the culture and bring qualifications and experience needed for the future. Concepts like career development and employee development also take center stage when HR is viewed from a strategic perspective.

Watch This Seminar to learn more about how to design a Human Resources strategic plan for your company.

How do You Develop a Strategic HR Plan?

Based on the Michigan study, there are a few basic steps HR can take to develop a human resources strategic plan that addresses each of these areas.

  1. Decide how many plans you need. Depending on the size of the organization, you may need more than one HR strategic plan. If you have a smaller company, one may be fine. But if you have 3 plants scattered around the country, what works in one demographic may fail in another.
  2. Look at the list of 6 areas and prioritize. Which area is the most important one that needs to be attacked right away?
  3. Identify your competitive advantage and how to measure it. I think HR sometimes misses the boat by not looking at why the company is where it is and how HR is contributing to it. What buttons are you pushing at what point in time and how is that creating an impact?
  4. Decide on your desired culture. What kind of culture do you need to work on to support your key business metrics?
  5. Create the tactical piece of the plan. How do you identify the key things HR needs to do? How will you push the buttons for compensation, benefits, work-life balance, performance & recognition, and development & career opportunities to impact each of the 6 areas?
  6. Decide how you will implement your plan. This is the most critical piece of all. What is your plan for implementing your strategy? Who will do what and when? How will you know if it is successful?

When developing HR strategic plans for clients, I also consider these items:

  • Recruiting
  • Employee Engagement
  • Performance Management
  • Training & Career Development
  • Total Rewards
  • Work-Life Fit
  • Succession Planning
    “Plans are nothing, planning is everything.”
    Dwight D. Eisenhower, 34th President of the United States

Ready to ignite your HR department and attain organizational goals? Contact me today at 717-314-3680 or to schedule an assessment of your existing HR strategy.

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