If you think that HR is merely an administrative function you couldn’t be more wrong. In its 150+ year history, HR has evolved to become a strategic pillar to any organization. HR is crucial to your organization’s overall management strategy.
Even though it has its humble beginnings as a people administration function, as companies realized the importance of people to competitiveness, HR became more than that. Additionally, when the market became candidate-driven and getting talented employees became a way for companies to develop a competitive edge, HR began to contribute to more than just facilitating processes.
This takes us to the concept of strategic human resource management. Compared to other HR theories and concepts, strategic HR management is quite new. It was introduced in the early 1990s.
Even though it has been 25+ years since the foundation of strategic HR management, some organizations still fail to realize the importance of the HR function to management strategy. Those who know the role that HR can play in devising and implementing strategies might not know how to involve HR in the strategic process.
What is Strategic HR Management?
Strategic human resource management means partnering with HR to identify, address, and solve business problems. These strategic initiatives help businesses to attain their long-term business objectives through people resources.
This includes aligning regular HR functions like recruitment, culture management, and compensation planning to the goals and objectives of the organization. What does this mean? It is recruiting and retaining the people that will help the business attain these goals, developing leadership, and creating a culture that boosts employee morale and productivity are all responsibilities of HR.
Challenges of Strategic HR Management
Even though many companies have now begun to realize the importance of HR as a strategic pillar, there are still some challenges that keep the HR department from becoming a part of the management strategy.
Lack of Resources
One challenge that commonly exists in small and medium enterprises is that HR is limited to the administrative role due to cost concerns. They leave the strategic planning and implementation up to the top leadership because they believe that complicating the HR function would unnecessarily increase costs.
Some may think that if HR is assigned to additional responsibilities, they may have to hire a larger HR team, or might have to outsource some labor-intensive functions like payroll and recruitment processes. They don’t realize the importance of developing a strategy that addresses employee concerns and makes use of employee strengths.
Management doesn’t Realize the Value
In some companies where senior management is still unaccepting of the HR role, convincing them otherwise can prove to be a challenge. They need to be shown the value that HR can derive for the organization including identifying employee issues, showcasing what works for employee morale, and other factors that might result in a failure of a planned strategy.
If a company wants to become an inclusive employer and wants to market the company brand in the same manner, the HR department is the one that knows how to go about it. Also, any recommended change like an acquisition should have HR input to plan the change process accordingly.
HR is aware of what issues the management will encounter during the implementation process. If involved in strategic planning, HR can help management to develop strategies to address issues and concerns before they rise.
Not Knowing How to Involve HR in the Strategic Management Process
Some companies might not know how to involve HR as a strategic pillar. They consult HR when it comes to recruitment for long-term strategic plans, but they might not know how to involve HR in the entire planning and strategy development process.
HR would be aware of how to go about this. If not, hiring a consultancy service can help align the HR function with the management to develop strategy for the organization together.
How can HR Help in Strategic Planning
Given the challenges that HR faces while becoming a part of the strategic planning process, HR can assist management in overcoming these issues.
A close alignment of HR with management is important to develop an ability to respond to employee needs. For example, a boost in sales due to a marketing campaign would require HR to hire additional people.
Unless the HR is aware of the kind of work that will be required because of the sudden surge, they cannot recruit effectively to meet the demand.
That being said, here are some of the other ways that HR can help support the management strategy:
Avoiding Costly Issues that Might Interfere with Goal Attainment
Issues like legal complaints against the organization can impact company reputation and add additional costs. When HR is aligned with strategy, they understand the impact that reputational damage will have in the goal attainment process.
Addressing Issues in a Timely Manner
HR is also responsible for addressing issues quickly and swiftly. As mentioned earlier, the need for new employees because of a marketing strategy playing out well can be quickly executed by HR.
Contributing to Employee Productivity
HR can significantly contribute to employee productivity. But unless HR is involved in the strategic process, it cannot align the productivity in the right direction.
If the goal of the organization is to go global by the next year, employees should be aware of the strategy and their efforts need to be aligned with the goal. Providing employees and leaders the training that helps them attain the skills they need for this goal is the responsibility of HR.
Developing a Healthy Work Culture
A healthy work environment is crucial to supporting management strategy. This means that the employees are satisfied with the culture and are willing to contribute to new plans. If the company’s goal is to expand, only an organization with a healthy work culture in which the employees are motivated can make this strategy successful.
Aligning Employee Interests with Organizational Goals
Even with motivators like compensation and benefit packages, employees might not be inclined to perform according to the organizational goals.
If they are offered career development opportunities that align with the business goals, they are bound to perform better. An example of this could be a promotion opportunity when the company expands.
Adding Strategic Focus to Training and Development
Training and development initiatives are not effective unless it has a direction. Although HR does conduct a needs analysis before conducting training, when strategic focus is added to training and development, it becomes more effective for the organization.
Providing Tools to Leaders to Implement Strategic Plans
By aligning HR with the management strategy, you equip leaders with the tools they need to implement strategic plans. For example, training leaders, facilitating mentorship programs for succession planning, and conducting employee surveys are some ways HR can equip the leaders.
Summing it Up
A successful execution of a business strategy requires the support of HR. The challenges of strategic HR management can be addressed gradually. To start, keep it simple. If HR has never been involved in strategic planning, inviting HR personnel to meetings is a great first step.
The closer HR and the management are aligned, the better the company’s responsiveness, agility, competitiveness, and strategic success.
