Named Founder Friendly Investors 2021 & 2022 by Inc.
Business strategy shapes human resources (HR)—and, in turn, HR must respond with a business-driven talent management strategy. But too often, organizations fail to integrate business strategy into HR decisions. According to Gartner, 66% of organizations say the main barrier to strategic HR planning is a lack of alignment with business needs.
Let’s discuss the vital importance of developing an HR strategy that aligns with business strategy—and how to get started.
How does a business-driven HR strategy benefit your company?
Since a business’s success hinges on its people, talent recruitment and cultivation must be a key organizational priority. Increasingly, HR leaders are working with company executives to set business strategy and then translating it into HR strategy. Creating an HR strategy aligned with business goals will provide the talent needed to accomplish these goals—and support them in every way that matters.
Likewise, developing an HR strategy aligned with business needs can help avoid costly mistakes and oversights. HR can make wise recruitment decisions and ensure that employees receive the training to achieve business goals. Plus, HR can establish the right infrastructure to support them and earn their loyalty.
A business-driven HR strategy begins with setting the right goals. According to Deloitte, the following business drivers should shape HR’s business strategy:
Talk with leaders about the business’s key priorities in these areas. Hone in on the most pivotal areas for growth. “Focus on high-impact HR activities that can create significant value for the business, rather than commodity activities such as transaction processing and administration,” writes Deloitte, discussing how to sync HR strategy with business strategy.
Here are some questions that can help get the conversation started:
Then, consulting with other HR staff in relevant specialties, consider what these predictions mean for HR:
HR can also use analytics to identify areas of need related to business strategy. Then, you can develop an HR strategy tailored to them.
Here are a few HR strategy examples that show how HR can focus on business priorities. Each sample HR strategy model described here addresses a different business scenario.
HR could support globalization by standardizing its operating model across countries as much as possible. Further, it can set up strategies for managing compliance across borders as well as cultural sensitivity training for leaders.
If a company will be restructuring, HR can begin planning to fill new and changing roles. Hiring the right talent at the right moment will ensure you spend money wisely. Within this strategic priority, HR staff can establish a competitive pay and benefits structure.
Does HR itself need to prepare for upcoming changes? If these changes demand new HR specialties, you could begin training existing staff to handle them. For example, perhaps you need an in-house expert with a specialization in compliance.
Also consider whether your HR staffing structure requires any changes. Perhaps one HR manager is no longer enough—you may need multiple managers who each have their own specialization. For instance, perhaps you need to create a recruiting director position with two recruiters reporting to it.
Similarly, if a company is operating in new locales, you might establish new HR branches there.
Of course, business strategy doesn’t always involve sweeping changes like globalization. Thus, not every HR strategy example will include drastic changes. In some cases, HR needs to focus on equipping current managers and staff for success while boosting job satisfaction. This could involve fine-tuning performance management processes, holding training such as DEI workshops, and upgrading rewards systems, for instance.
No strategy is complete without metrics of success. Pinpoint five to ten performance measures you can evaluate over time. Make sure they are quantifiable and represent your key strategic priorities. Then, incorporate these metrics into leadership employees’ annual goals.
Every business must support its HR staff in setting strategies. This can begin with giving one or more HR leaders a seat at the table during high-level strategic meetings. HR staff have much knowledge to contribute to these conversations, helping leaders determine how to achieve their strategic goals. Plus, this will allow HR to evaluate its strategy periodically. According to Gartner, 28% of businesses don’t reevaluate HR strategy more than once per year, and in today’s fast-changing business landscape, that simply isn’t enough.
Further, other leaders should be available for follow-up conversations about HR’s strategic targets. An HR director may need to circle back with them after speaking with other HR specialists.
By developing a business-driven HR strategy, you’ll help your company fulfill its mission and strategy. You’ll have the right talent in place for every role, and you’ll fully support their needs while maintaining compliance.