Within the past twenty years, the focus on human resource strategy has increased significantly. This heightened recognition due in part to business strategists and human resources academic citations directly contributed to the spotlight’s direction moving in HR’s favor. The importance of human resource strategy becomes evident when an organization acknowledges the most important asset of the company, the employees.
Definition of HR Strategy
Human Resource strategy focuses on the performance of the organization. By taking a holistic view of the whole, human resource strategy gives sight to systemic issues impeding the accomplishment of organizational goals. Through the successful implementation of key methods that improve the company’s financial position will an HR activity attain the designation of strategic.
Competitive advantage becomes an output of consistently focusing on human resource strategy. This is possible only when companies work alongside human resources and implement systems and practices together. By having the right people in an organization, the company has an advantage over others with a less productive workforce. High performing individuals help the organization’s strategic performance.
Types of HR Strategy
The high performance work system (HPWS) is a type of human resource strategy, which focuses on effectiveness of workforce staffing principles and training. This type of strategy helps to increase performance across the organization and works well for different types of companies. The commitment strategy utilizes techniques such as employing very skilled employees, clearly defined responsibilities and higher pay and benefits. The control strategy focuses on low requirements for employment, micromanaging and low pay and benefits.
Human resource strategy affects the performance of the workforce, which affects the organization. The strategy determines which programs and systems the company will utilize. These systems can either help or hinder the productiveness and engagement level of the workforce. By decreasing productivity and engagement, a human resource strategy can significantly reduce the performance and profitability of the company.
Companies sometimes have difficulties measuring the effectiveness of human resource strategy. To rectify this, an organization can use a balanced scorecard measurement approach to determine the achievement of strategic human resources goals. The balanced scorecard allows the company to select the categories for measurement and then associate goals to those categories. This approach provides a more balanced assessment of the efficacy of the human resources department and the entire organization. Managers also play a role in measuring human resource strategy through providing necessary feedback on systems and program implementations.