A SWOT analysis examines the Strengths, Weaknesses, Opportunities and Threats to assist human resources (HR) in developing its strategic goals and defining the direction the organization and the HR department take to achieve those goals. The beauty of this type of analysis is that it helps in the transition from a reactive mode to a proactive one – it keeps you at least one step ahead of the game in creating and sustaining a world-class workforce.
Playing to Strengths
In human resources management (HRM), your department strengths typically are internal factors that support your HR strategy and function. HR strategy includes long-range goals, such as keeping up with trends concerning workforce talent or becoming an employer that attracts the most talented applicants and retains engaged workers. Think Google, Microsoft or Amazon as models for the types of businesses that receive thousands of applications and resumes every day.
The general public or applicants who want to work for these companies might be unaware of what their organizational strengths are, but you can safely assume that their HR departments aren’t flying by the seat of their pants in creating a brand of HR that has what some applicants believe is their dream job with a fantastic employer.
SWOT analyses can reveal strengths in every functional area of HR. For example, the recruitment and selection strengths might include recruiters who are well-versed on the full life cycle of employment and who routinely explain to applicants and candidates every step of the employment process so they feel comfortable vying for jobs. In short, internal factors that are strengths generally are HR staff expertise.
Understanding Your Weaknesses
In addition to telling you what’s working well in your HR department, a SWOT analysis of HRM enables you to see what’s not working well, and ultimately the organization, since HR supports the organization workforce. Weaknesses uncovered by a SWOT analysis are areas for improvement. Just like your SWOT analysis can reveal the strength of your HR expertise, it will conversely reveal weaknesses in your HR expertise.
For example, if your HR benefits specialist doesn’t have current knowledge of federal and state employment laws, that’s a weakness that can become a liability. Of course, you can reverse that weakness through providing the benefits specialist with training on current regulations and even including “maintains knowledge of applicable employment laws” on his performance appraisal if it already isn’t included as part of his performance expectations. This SWOT analysis for compensation and benefits is very important since it’s connected to your organization’s compliance with employment laws and regulations.
Looking for Opportunities
An important, external factor for HR conducting a SWOT analysis of the department is the opportunity for growth – on an organizational level, which translates into a need for growth at the HR departmental level. For the organization, growth can mean expansion into a new or emerging market, or the development of a new product line or service. To support that kind of organization-focused growth, you will likely need growth in the HR departmental expertise or staffing. Otherwise, the organizational growth will become a weakness for the HR department if HR cannot accommodate growth at the macro level.
Another example of an opportunity that may come to light through your SWOT analysis is the company’s success in hiring a business development professional who can, by virtue of her connections and networks, improve the profit margin for your business. This kind of opportunity also requires growth in the HR department to support additional business, and thus, increased staffing to support it.
Navigating External Threats
Your SWOT analysis in HRM exposes your departmental threats. These are external factors that can have a negative impact on the HR department and the organization. An example of an external threat is a competitor that was able to poach your highest-producing sales executive. Not only do you need to fill the position she left vacant, but you need to develop a strategy for sustaining your organizational success without her, despite the likelihood that she is using those practices in her new job.
Other external threats can be environmental, such as changes to wage laws that impact your ability to pay your employees. The movement to minimum wage rates has affected many small businesses and big business alike. HR departments are sometimes at a disadvantage because they are not self-sustaining – they are not revenue-producing departments, so funding can be limited for HR activities above what’s absolutely necessary. The best way to minimize the effect of external threats is to use a SWOT analysis in HRM far enough ahead of time while you can still act from a proactive stance.