How to Create the Best HR Function: Link to the Business Strategy
Often at Helios, we are approached by CEOs and Human Resource executives who want to redefine HR’s role from being administrative to a role that strategically defines how the organization’s goals will be achieved through its people.
And it makes sense why leaders want to get more from HR than just processing payroll and benefits.
The Boston Consulting group’s study, Creating People Advantage 2014-2015: How to Set Up Great HR Functions, revealed “companies that are stronger in people management have a corresponding higher performance.” Further, the study states that great HR functions understand the organization’s most urgent needs and goals, which allows them to meet long-term considerations such as the supply and quality of employees. This research highlights the strategic contribution HR can make to an organization, and when HR is effectively aligned with the business strategy, there is a positive impact on both employee performance and organizational profitability.
4 Steps to Align Your HR Strategy with the Business Strategy
So, what does "alignment” look like and how does HR go about it? HR leaders should:
- Understand the business strategy and current state challenges. Consider the goals and expected outcomes for the organization. Is the organization pursuing a growth strategy? Or, is it trying to turnaround underperforming business lines?
- Identify how people must contribute to organizational growth and success. Seek to understand what you are asking your workforce to do in service of the goals. What new or different skills, competencies, and behaviors are needed? What are the best functions and positions needed to deliver on these expectations?
- Design and implement your HR talent strategy. Once you know where the organization is headed and what it requires of its people to get there, HR must determine the gaps between its current workforce and what is required to accomplish the organization’s business goals. Define strategies needed to acquire, train, develop, performance manage, and reward the very high-performing talent that will carry your organization into the future.
- Measure your HR strategy. Whether you use an HR scorecard or other metrics, these measures indicate if your HR talent strategy is successful or when a course correction is necessary.
Empowering – and expecting – your HR function to make a strategic contribution ensures HR aligns its resources and activities in ways that enable the organization to meet its goals through its greatest competitive advantage: its people.