The number of HR professionals yearning to be considered more strategic continues to rise. Too many organizations still view HR units as merely transactional and offering little value. Luckily, advice for becoming more strategic abound; consider for example an APQC report or this article. But, what does being strategic in HR really mean?
When I pose this question to business leaders, I get a variety of answers. Some are akin to “people are our most important asset, so HR should be strategic.” Others, with more conviction, state that “since human capital represents nearly 70% of a company’s assets, we have a people strategy.” They are not too far off, but let us consider further what we mean by strategy.
Strategy is the practical expression of intent or aspiration that propels an organization to innovate, change, leverage resources, and develop new capabilities. A business strategy is an action plan designed to achieve a goal or a desired future. Strategy is not a tactic. A tactic is a plan to handle a current situation.
In their efforts to become more strategic, human resource organizations have been devising ways to improve their organizational impact by embracing practices that address business challenges and make a direct contribution to long-term business objectives. Successful HR leaders are more conversant in finance, strategy and operations nowadays. They monitor to ensure that people investments are aligned with top business priorities; they know their cost of labor; they advocate for rigorous analyses to determine if buying, building, or borrowing workforce capabilities would be more advantageous; they know who their critical employees are and see that they are actively engaged; they focus on attracting top talent and improving employee experience; etc. Strategic HR leaders find ways for human resource units to add value. They know that a good business strategy is achieved through an understanding of not only how to achieve a strong competitive advantage, but also how to execute that position and the competitive vision over time. Consequently, strategic human resource management is concerned with creating programs to enable and accelerate business plan execution.
Since an HR strategy can either enable or hinder a business strategy, HR organizations need to determine and implement the right policies, processes, and structures; to attract, develop, and retain the right people; to foster the right culture and work conditions; to achieve business objectives. Working on all of these and other items on a regular basis is not easy, but doing so will have a positive impact on the continued success of a company. (Here is sample of an HR Strategy Map for improving workforce effectiveness).
Now, what would happen if your employer were to expand its business abroad? How would your HR processes need to be adapted to enable this business growth? Would you need to change your compensation and rewards plans? How would you need to adapt your leadership style to succeed in a multinational company?
If you work for a start-up or a small company, do not make the mistake of dismissing the globalization prospect. Due to advances in transportation and communication technology, almost any company can open a virtual store in Europe, have suppliers from India and South America, and need to hire sales and service representatives across several continents. So, the above business scenario could become very real for you.
Again, how would your HR processes and practices need to change to facilitate a global
business expansion? For example, would you have to modify your people policies to support the #MeToo movement in other geographies? Would you launch the same US wellness program at all your international facilities? Or, would you have to change your recruiting practices to accommodate local customs?
If this article has piqued your interest, you should consider signing up for HRD8420: Strategic and Global HR Leadership ― a new elective course in the HRD Program. Not only will we answer the questions raised in this article and learn about global practices, but we will also analyze and contrast specific business situations from different continents to hone our HR knowledge and leadership skills. Hope to see some of you in the upcoming class.
Enio Velazco, Ph.D. is currently the VP for HR Strategy and Business Transformation at SAP and serves as an adjunct faculty member in the Graduate Program in Human Resources Development at Villanova. Learn more about him here!
Photo credit to Rawpixel and Vladislov Klapin from Unsplash.