Human resources management is an essential – no, critical – function of your organization. Any viable business needs human resources, or people, to move forward the organizational mission, values and principles. And to do the work. Strategic human resource management enables alignment between the HR department or HR function and your company's business goals.
What Is Human Resource Strategy?
Human resource strategy differs from traditional HR in a couple of important aspects. HR strategy is long-term and focuses on workforce planning and workforce development from a forward-thinking perspective. Traditional HR, or personnel as it was once called, is focused more on the transactional nature of HR, such as reviewing applications, maintaining a census of FTEs (full-time equivalents) and signing up employees for insurance benefits. Strategic human resource management, on the other hand, focuses on alignment of employee qualifications with the organization's workforce needs. This type of HR management provides employee training and development to prepare the workforce for company growth, as well as the employee's professional growth. An effective way to approach strategic HR management is for HR leadership to participate in or lead high-level or executive discussions about the strategic direction of the company and how to ensure the workforce meets the company needs. Human resource strategy is critical in both the private sector and in the public sector. Specific employer needs may differ between the sectors; however, the need for a strategic vision where human resources are concerned are universal.
Some of the activities that fall under the purview of human resources strategy include gaining a seat at the executive table so that human resources doesn't operate as a silo. Participating in executive-level discussions and decisions ensures that the human resources function of the organization is an integral part of the organization. Obtaining feedback from department supervisors and managers is another function of human resource strategy. If your strategy has an impact on the organization, then it should include department-specific input.
Types of Human Resource Strategies
The human resources department generally has several functional areas. They include recruitment and talent acquisition; employee relations and labor relations; compensation and benefits; workplace safety; and employee training and development. Although these functional areas may operate separately, they are interdependent, meaning you cannot have recruitment and talent acquisition without compensation benefits. You also must have employee training and development if you're thinking strategically about human resources. Employee relations are required to sustain positive employment relationships among the workforce, but labor relations may only be necessary if your workforce is unionized or under threat of becoming unionized. Employers are required to provide a safe work environment for employees, so workplace safety is another required functional area.
While it isn't the ideal situation, it is possible to engage in a human resources strategy in one functional area and let strategy take the back burner in another functional area. Overall, however, human resources strategy should take on a holistic approach. The HR department manager or director should be part of the executive team if the company's human resource approach is, indeed, a strategic one. The types of human resources strategies may differ based on the functional area.
Human Resource Strategy Examples
Adopting a strategic approach for recruitment and selection – talent acquisition – may consist of analyzing the current labor market availability for qualified applicants and comparing it to the organization's current and future needs. With an eye towards the long-term, the recruitment strategy might include cultivating relationships with area colleges and universities to ensure they are aware of your company's workforce requirements when students graduate.
For example, say that your company provides skilled nursing care. The Bureau of Labor Statistic’s prediction that there will be a 15-percent growth in the registered nurse occupational category for the 2016-to-2026 period means that the nursing shortage will be the worst since the 1960s. From a strategic standpoint, your organization would do well to work with colleges and universities to identify priority candidates for positions within your company. Also, your in-house training and development efforts could prepare current staff for leadership positions, such as nurses who move into management positions and nurses who mentor new staff nurses.
Another example of human resources strategy might involve your employee relations or labor relations functional areas. Employee relations is responsible for improving and sustaining positive relationships with current employees, and labor relations is responsible for administering the labor union contract (collective bargaining agreement) for employees who are union members. Strategic human resources within the context of employee relations could involve providing seminars on workforce diversity, training supervisors on compliance measures (equal employment) and ensuring that you have an effective affirmative action program. This would be particularly important if you are a government contractor with reporting requirements regarding hiring practices and outreach methods that ensure a diverse workforce.
For labor relations, a proactive strategy is necessary if your organization is experiencing union-organizing attempts. You could develop a training program for your supervisors to learn how to recognize the signs of union-organizing efforts and prepare them for organizing campaigns. It would also prepare them for full compliance with the National Labor Relations Act should they eventually become supervisors in a unionized work environment.
Your compensation and benefits programs are critical to a human resource strategy. You will need to do more than revisit the compensation plan once every year. Forward-thinking principles concerning pay and benefits consider factors such as labor market availability, competitors' pay practices, the value of services and products and the qualifications of your workforce. Ideally, your compensation and benefits plan should align with your employee training and development efforts. Providing your employees with training and development opportunities for improving their skill sets should come with tangible rewards. That is where the strategic vision of a compensation and benefits staff member or manager is especially useful.
Human resource strategy related to employee training and development is a no-brainer. To maintain a competitive edge, your organization cannot afford to stop at just attracting the best and brightest applicants and identifying qualified candidates. The key to maintaining your competitive advantage in your industry is preparing your current workforce for industry changes, promotion and upward mobility. Professional development is essential even for those who don't stay with the company. Implementing a training and development strategy requires an enormous amount of time, energy and money. Your strategy will likely include crafting a convincing proposal that provides a needs assessment to your executive leadership team and examines the return on investment for such an endeavor. Furthermore, succession planning should be on the strategic timeline for identifying high-potential and talented employees whom you will groom through such activities as job shadowing, mentoring and job rotation.
Why You Need Human Resource Strategy
If you intend to stay in business, a human resource strategy is critical for your business to survive. Businesses that focus solely on the transactional nature of human resources, such as payroll processing, record keeping and administering sick leave policies may find themselves scrambling to prepare for future growth. You need human resource strategy to stay on par with your competitors and ultimately to exceed those competitors' capabilities if you want to become best-in-class in the industry or in your market. Because human resource strategy focuses on individual and organizational growth, you also need a strategic plan for sustaining job satisfaction and engagement throughout your workforce.
Human resource strategy addresses the systemic issues that are inevitable in any organization in a proactive way. For example, if your organization is a team-focused work environment, there will be, at some point, workplace conflict. Whether the conflict is between employees or between supervisors and employees, it's incumbent upon the human resources department to create an environment where supervisors are capable of resolving interdepartmental conflict so that it doesn't affect other departments or the entire organization.
Human resource strategy also is important if you are in an industry where there is rapid and ongoing change, such as the technology industry. It will be virtually impossible for your company to survive in an industry where change is constant. Greek philosopher Heraclitus said thousands of years ago that the only thing that is constant in life is change, and, of course, he wasn't referring to the technology industry.
Your company's reputation correlates with your human resource strategy. The job-seeker community is relatively small. If your company is known for its proactive stance on employees' personal and professional development, it can foster high morale in your current workforce. Your forward-thinking strategy and actions will also boost your reputation in the job-seeking community. Inc. magazine routinely profiles "The Best 50 Employers," and many of the companies they choose are applauded for their strategic vision, as well as their efforts to give their employees the tools they need to be successful.
Your stellar business reputation will also be a significant benefit for customer acquisition and for keeping current customers happy. Whether you are still developing your customer base or have many customers, an effective, well-thought-out human resource strategy is bound to pay off tremendously in customer support. The return on investment for your human resource strategic efforts is improved employee engagement scores, as well as consistently high client satisfaction and positive feedback.
How to Improve Your Human Resource Strategy
The key to improving your human resource strategy is to be proactive, not reactive. And when you develop your human resource strategy, document it. But don't let that strategic plan just sit on the shelf. Include your human resources staff members in the development of a strategy. Both HR management and staff members should be involved in discussions about strategic moves since everyone in the department will have valuable input. While the HR manager or director will be the person in high-level discussions with executive leadership, she should present ideas from all the staff. The manager should also give credit where credit is due, especially if HR staff members contribute ideas that work to the company's advantage.
Another way to improve your human resource strategy is to recruit HR professionals who are forward-thinking practitioners. During the recruitment and selection process of HR team members, ask interview questions that reveal what they believe are the goals of a human resources department. Technical knowledge and skills, such as understanding labor law and building compensation plans, are great qualifications, but if you're creating a world-class HR team, you will need specialists who see strategy as a means to demonstrate their commitment and ability to carry out the organizational mission.
Strategic HR Management Success
In her January 2018 post for Engage, the employment engagement blog at The Achievers Employee Engagement Platform website, Jessica Thiefels describes the five pillars of success for strategic HR management. Compliance is the first measure of success. Above all, HR management must focus on risk mitigation and compliance with federal laws and regulations, and applicable state and local regulations. Fair employment practices and compliance with laws concerning employment eligibility, for example, 1-9 forms, are fundamental to your success in managing the company's human resources.
Employee engagement is another pillar of success, according to Thiefels. Programs that recognize employee performance and achievements go a long way toward improving job satisfaction, motivation, employee engagement and productivity.
Along with employee recognition, professional development is another measurement of successful HR strategic management. Career mobility – whether through promotions or lateral movements to different positions – gives employees an opportunity to learn new skills and explore interests that match their career goals.
Providing career advancement for your employees also is an excellent way to manage your resources by developing talent within the organization. Finally, a successful HR strategy can improve your business's reputation throughout the job-seeker community and internally among your current workforce.