What Does Strategic HR Even Mean?

For the past few years, there has been a lot of talk about HR “becoming more strategic,” and “earning a seat at the table.” And based on recent research, company leaders are beginning to notice and appreciate the value HR has to offer to help the company achieve its goals. But in order to become more strategic, we have to understand what that really means, which can be challenging when we have spent years focusing on managing day-to-day operations. Hopefully this blog will help clarify what strategic HR is so you can start building your 2017 HR strategy, if you haven’t already.

When HR is truly strategic, there is synergy between the business and HR operations. Instead of working in a silo, HR activities and services are helping to channel the company’s people resources towards the furthering of its goals and objectives. There are a variety of levers HR can operate to make this system work, but it also relies on a well-crafted plan to underpin the daily activities and ensure alignment with organizational strategy.

HR Strategy Versus Tactics

One of the most interesting books I read recently focuses on business strategy. In I Have a Strategy (No You Don’t), the author points out many of the common flaws in thinking when it come to strategy in general. One of those is mistaking tactical decisions for strategic ones.

For example, if you change your website’s font color to bright green in order to attract more sales, that is a tactic, not a strategy. The overarching strategy might be to increase sales by 10%, and the font change may be an action item under that strategy for implementation purposes, but it’s just one example of how strategy is often misunderstood.

In the context of HR, this is the difference between paying retention bonuses (tactic) and trying to retain employees to improve customer service (strategy). A strategy has a larger scope and requires multiple tactical actions to execute it. This approach was echoed in a SHRM Foundation report on HR strategy, where the author offered this definition:

For our purposes, HR strategy means a system of human resource practices… aimed at the best employee performance possible to meet the firm’s ultimate goals.

It’s important to note the “system of practices” piece, because that is the difference between a single HR program and a cohesive HR strategy.

Another key element is business alignment. An HR strategy is more than just offering training or benefits in a vacuum. Decisions need to be made to connect each activity to the business objectives it supports. The section below examines a common use case for how this occurs in many organizations.

Strategic HR Use Case

Because strategic human resources management is connected to business strategy, it’s easiest to start with a business objective and work backwards into how HR can support it. For example, let’s say customer service has been struggling. From an HR standpoint, there are numerous ways to create a strategy for improving customer service scores, even though that specific department isn’t under the purview of HR. For example:

  • Training: develop training tools and performance support assets to help customer service reps at the point of need
  • Retention: focus retention efforts on employees with the highest customer satisfaction scores
  • Compensation: create monetary awards for higher than average customer service scores
  • Recruiting: focus selection questions and assessments on behaviors associated with a service mindset

Each of these is a specific tactic that falls under the overarching strategy to improve customer service across the organization, and it isn’t limited to just these responses. We could also explore coaching, informal learning, peer recognition, and other programs to drive results.

Strategic HR is also valuable because it is measurable. By linking the activities to company goals, it is possible to determine the extent to which HR does or does not support business outcomes such as sales, retention or customer satisfaction. This is how HR becomes a true business partner instead of a siloed, disconnected function within the organization. In the final post in this series, we will examine how to demonstrate HR’s ROI to the business.

Written by: Ben Eubanks, Principal Analyst, Lighthouse Research & Advisory

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