Human resource strategy (1)

Another Friday has rolled by. How has this year been so far? More than ever before we have to be most intentional this year and yet we have to be surrendered. So I guess it is intentionally surrendering to the way things are while being intentional not to allow analysis paralysis. That is a discussion for another day.

Today we are talking about HR Strategy and its importance. Human Resource strategy is a business’s overall plan for managing its human capital and align it with its business activities. The HR strategy is based on organizational strategy. The HR strategy touches on all the key areas in HR. These include recruitment, learning & development, performance appraisal, compensation, succession planning, career path, welfare and separation.

The HR strategy is a long-term plan that dictates HR practices throughout the organization, over at least five years. It requires an analysis of the organization and the external environment. The strategy usually takes longer than one year to implement and should be looked into and revised at least once a year in line with current realities. Strategy shapes the character and direction of HRM activities. This helps the deployment and allocation of organizational resources (money, time, personnel). The strategy also helps with documentation which aids business continuity. It is data and number driven, resulting in a culture that could be replicated.

HR strategy is a result of the broader (business) strategy. It shows that HR activities create value when they are aligned with what the organization tries to achieve. Alignment between the two ensures good results for the organisation. The overall business strategy is formulated based on what the company has been doing in the past and its current internal capabilities. The SWOT analysis is often used to help with the strategy formulation.

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In the SWOT analysis, the organization’s internal Strength and Weaknesses, and its external Threats and Opportunities are mapped. Strengths include the company’s core skills. These are its production capacity, existing brand, marketing channels, sales capabilities, R&D expertise, and other human capital factors.

The company’s strategy leverages its Strengths to capitalize on the opportunities in the market. At the same time, it tries to circumvent Threats and minimize the impact of Weaknesses.

The result of this strategy-setting is the company’s value proposition. For example, the value proposition of a discount retailer could be “everyday low prices”. This explains a number of internal HR practices, especially the ones related to worker compensation. An example of an HR strategy is an HR mission statement and HR vision, with concrete, high-level actions about how to execute on them.

The result of an HR strategy is often an HR mission statement. The HR mission statement helps to clearly define where the organization wants to go. All Human Resource Management practices and decisions can be judged based on this statement.

An example is the HR mission statement of a university is the “The HRM creates, encourages, and maintains an environment that supports, develops and sustains the well-being of her employees, students, and the broader community.”

This mission statement clearly focuses on the creation of an environment for different groups. This makes it easier to make decisions and start initiatives regarding HR’s involvement in different projects. For example, this HR department is actively involved in student projects.

When creating and implementing an HR strategy, there are a number of best practices to keep in mind. These help to create, implement, and execute the strategy. They are: HR professionals should know the strategy and be involved in its creation. A strategy must be clearly communicated. Involvement in the creation helps in the communication of the strategy and creates buy-in.

Management must buy into the strategy formulation and the HR budget are critical enablers of strategy execution. An HR strategy can never be realized in isolation. Conditions are management buy-in, budget, skilled HR professionals, and appropriate digital technology.HR initiatives should be aligned with their strategy. The strategy is there for a reason: it should be followed. HR practices and initiatives should follow the strategy.

Performance incentives should be directly connected with the execution of the strategy. Pay for performance is not new and people usually work harder if their goals and incentives are aligned. Strategies should be monitored and execution measured through agreed performance indicators. Strategy will never be effective without consistent implementation and monitoring of results.

This is the first part of this article. The strategy is the bedrock of anything you want to do. How, when, why and where and even more. Next week we will look at the framework and examples of the strategy.

Have a good weekend and stay safe.