The talent field has changed, and human resources professionals are tasked not only with recruitment and benefits but guiding staff through an ever-shifting global pandemic, facilitating employee engagement and strengthening culture. The era of personnel management and administrative tasks is over. Today, the most successful companies are looking to support core business strategies with strategic HR focused on talent acquisition, growth, and retention, as well as recruitment branding, employee value propositions, diversity and inclusion, and more.
In fact, “a distinctive feature of the coronavirus pandemic has been to elevate the role of the [chief human resource officer (CHRO)], who is often visibly helping CEOs manage the present and lead their companies into the future,” explains Arianna Huffington in Harvard Business Review. “CEOs are leaning on their CHROs to ensure their workforces are feeling supported, because they know the future success — and in many cases, the survival — of their businesses depends on it.
We know that people-first companies drive higher performance, and in 2021 and beyond the best HR leaders will not only help their organization but reposition HR as a strategic thought-partner and decision-maker. For HR leaders, this could mean a new path upward — to the C-suite.
So what is strategic human resource management (HRM)? And what are the most effective HRM strategies?
What is Strategic Human Resource Management
According to John Storey, professor of human resource management at The Open University, strategic HR is a distinctive approach to employee management that seeks to gain a competitive advantage for the organization by integrating and leveraging cultural, structural and personnel techniques to deploy a more highly committed and capable workforce. While there is no one universal definition of strategic HR management, the primary principle is to connect the HR function to the primary business objectives and improve business performance by developing and maintaining a work culture that inspires innovation.
The framework of HR as a strategic partner developed in the early 2000s, triggered in the late 1990s by a “new mandate for human resources” by David Ulrich, co-founder of The RBL Group and a university professor, author, speaker and management coach. At the time, Ulrich said, HR had become “often ineffective, incompetent and costly,” and should instead be defined by “results that enrich the organization’s value to customers, investors and employees.”
Ever since, HR’s role has been “facilitating that clear line of sight between the overall values and goals of an organization and what the individual employee recognizes as their specific contribution.” However, as HR Magazine points out, “an ongoing challenge for many businesses appears to be getting line managers to bring HRM policies and practices to life.”
In companies with effective strategic human resource management leadership, the HR department develops and implements programs that help solve the organization’s business problems and contribute to its long-term business objectives. When HR collaborates with the C-suite, the needs of the business guide the actions of human resources, and HR helps the business achieve its goals. In top-performing HR departments, this synergy drives every initiative.
The benefits of this synergy are extensive. The more closely HR and an organization’s leadership are aligned, the more effectively the company can anticipate and respond to changing needs and promote employee productivity and organizational success.
Companies Doing Strategic HR Right
Human Resources MBA has developed a list of the world’s 30 most innovative HR departments, leveraging the HR function to strategically grow and strengthen the organization’s market position. Here are the top five:
- Google: “What truly makes Google a great place to work is the people… Google’s philosophy is that with the right tools, you can attract the best talent, and develop happier and more productive employees.”
- Cadbury: “The company is built on an altruistic belief system that makes people a priority. The Cadbury culture combines positivity and balance, among work and life.”
- SAS: “SAS is noted for offering a high-trust environment and exhibiting a low turnover rate. The HR department is recognized as a pioneer in addressing day-to-day stresses and concerns that are common in a workplace environment.”
- Nissan: “Kaizen is a key philosophy of Nissan that empowers the workforce to continually improve the way the job is done. Nissan implements this philosophy when choosing each production worker. The teams recruited are the best of their kind and each member is geared toward improving their skills to shine above the rest.”
- Twitter: “HR focuses a lot of time and attention on training managers to lead, while maintaining a culture of authenticity, transparency, and accessibility. Twitter is able to maintain the scrappy start-up feel while becoming a major tech firm because of the extensive training offered to those in leadership.”
Other inspiring examples of effective human resource strategy include:
- Walmart, which aligns its seven core business pillars — price, operations, culture, key items/products, expenses, talent, and service — with strategic human resource management, invests in continuous employee training and learning, and emphasizes company culture and entrepreneurship.
- Cisco, which provides its managers the autonomy to build their teams and real-time intelligence to monitor performance, and its employees the tools and insights necessary to take initiative and advance their careers.
- LinkedIn, whose company motto is to work hard and play hard, hosting all-company parties, rewarding staff members for hard work and dedication, encouraging employees to create systems that break the status quo, and designating monthly “InDays” for employees to take a break from regular work and explore new ideas.
Developing Your Strategic HR Plan
A strategic HR plan should include HR initiatives that promote the behaviors, culture and competencies needed to achieve the goals of the larger organization.
The best strategic HRM strategies:
- Are based on an analysis of the organization and the external environment
- Take longer than a year to implement
- Shape the character and direction of the HR department
- Guide the allocation and deployment of organizational resources
- Shape the company culture
- Are revised on a yearly basis, and whenever necessary
- Incorporate the expert judgment of senior HR leadership and/or a third-party HR consultancy like MBL
- Target and track against quantitative key performance indicators
- Result in specific behaviors
Your strategic HR plan could include:
- Assessing staffing and skills needs, and developing a dynamic, future-forward approach to training and development
- Developing and maintaining competitive compensation and benefits packages
- Designing and managing performance and rewards systems
- Analyzing competitors’ recruitment and retention practices
- Creating policies, procedures and practices to facilitate diversity, inclusion and equity
In developing your HR strategy, follow these steps:
- Evaluate the current situation, and conduct a strengths, weaknesses, opportunities and threats (SWOT) analysis of your organization
- Envision and articulate a desired future, and create a vision statement that is inspirational, aspirational, compelling and concise
- Formulate the strategy, with clear objectives that are relevant to the organization’s position in the external market, recognize the organization’s strengths and weaknesses, can be achieved and measured, reflect the organization’s overall strategy, and can be effectively communicated and supported throughout the organization
- Identify the primary actions required to achieve the objectives, set milestones for each action, plan contingencies, and determine the necessary resources
- Establish mechanisms for evaluating progress, as well as opportunities to adapt and update accordingly
The Six Key Skills of a Strategic HR Leader
To lead a strategic HR department, be sure to cultivate the following skills:
- Business expertise: understand and speak the language of the business
- Change management: prepare and support individuals, teams and organizations in making organizational change
- Organizational engineering: improving organizational efficiency, effectiveness, communication and coordination
- Culture management: Fostering a work environment that helps all employees contribute and collaborate at their full potential
- Data analysis: inspecting, cleansing, transforming and modeling data to identify useful information, draw conclusions and support decision-making
- Marketing: Leveraging happy employees as ideal brand ambassadors to customers, prospects and recruits
The Difference Between Traditional HR and Strategic HR
Strategic HR and Change Management
For strategic human resource management to be effective, HR must play a key role in the strategic development and implementation of company policies. Of course, during times of crisis, new policies are required — and HR leaders must leverage this opportunity to play a greater role in organizational decision making.
In trying to adapt to the effects of the pandemic, for instance, many businesses discovered that their historical focus on efficiency had created rigidity in their organizational design, workflows and networks that weren’t allowing them the flexibility necessary in today’s fast-changing world.
At the end of 2020, Gartner surveyed more than 800 HR professionals in 60 countries across all major industries in an effort to identify the top priorities for human resources in 2021 and beyond, and almost 50% of those surveyed identified organizational design and change management as the top priority.
According to Gartner research, only 19% of HR leaders believe their workforce can effectively change direction in response to changing needs or priorities, and fewer than four in 10 think their employees know whether they’re focused on the right priorities for their clients.
Future-forward work design is what’s needed to ensure employees can anticipate changes in needs and adapt their approach accordingly — and it’s the responsibility of HR leaders to rethink work design strategies to overcome work friction across the organization.
To achieve this, work design must align with how work is actually done; it should not be the responsibility of employees to create processes where none exist, or create work hacks around the way their business unit is structured.
Gartner research shows that ongoing adjustments increase workforce responsiveness by 11% and drive 11% more employees to exert high discretionary effort — and the best way for HR to ensure that regular adjustments take place is to embed them in broader ongoing talent initiatives and the overall business strategy.
Here are some critical recommendations outlined in our Guide to Being the Best HR Leader:
- To prevent teams from being overwhelmed, focus on outcomes, design work to prioritize the effort of employees toward the highest-value tasks, and clarify the desired outcomes and minimum inputs
- If resources are strapped, devolve decision making and provide frontline employees with more ownership since they often know best how resources should be allocated
- When processes are too rigid, create a policy on how processes can flex to enable more employee autonomy and ensure innovative ideas aren’t diluted by risk-averse consensus
More Human Resource Strategy Guidance
To learn more about leveraging HR strategy to become an HR leader at your organization, download Your Guide to Being the Best HR Leader in 2021 and Beyond.
The MBL Difference
If you’re looking for guidance on human resource strategy, there’s no better solution than MBL. At MBL, we are a true partner. We think of our work as building relationships, not as a business transaction. It’s our mission to learn as much about your company and its needs as possible, so we can act as your guiding force. We will share our vast network of carriers, technology and wellness providers, and more, so you can keep your employees happy, attract new talent, and boost your bottom line.