Strategic human resource management involves a future focused goal-oriented process of developing and implementing HR programs and initiatives that will address and solve business problems and directly contribute in achieving major long-term business objectives of the organization
Gone are the days when HR management was seen as an administrative function focused on daily responsibilities such as employee recruiting and selection and managing employee benefits. Changing market conditions and new business thinking call for HR business strategies that include recruiting and retaining the right people, as well as providing ethical and cultural leadership.
Strategic planning presents great challenges and plethora of opportunities for HR professionals. Nearly all HR leaders in the largest global companies are involved in strategic decision-making and are member of the organization’s strategy team, and a majority of HR professionals have strategic planning as part of their core job. In contrast, HR professionals in many medium and small organizations are not often involved in organizational or functional strategic planning. Consequently, to achieve long-term strategic H objectives that are set by HR and to be a key player in the organization’s strategic planning process, some HR departments may need to strive and justify to senior management about the value and contribution they can provide , and in overall organizations strategy.
How to develop a strategic HR plan?
Developing a strategic HR plan is an art as well as it needs scientific approach. HR’s role includes developing a plan of HR initiatives to achieve and promote the behaviors, culture and competencies needed to attain and achieve organizational goals.
Results-oriented goals broadly include the following:
- Correctly assessing staff requirement, skill set, job role requirements.
- Developing and maintaining competitive pay and benefits at par with industry standards.
- Managing performance and designing a rewards system that keeps employees motivated and developing yardsticks to measure and quantify performance.
- Knowing about strategies and techniques competitors are using to recruit and retain talent.
- Providing training, including ethics, which reinforces corporate values and instill a sense of responsibility towards corporate goals.
The strategic planning process begins with some critically analytical questions like:
- Where is the organization now? – Reply to this question is expected to assess the current situation.
- Where do we want to be? – Reply to this question is expected to Envision and articulate a desired future.
- How organization will get there? – Reply to this question is expected to Formulate and implement a strategy and strategic objectives.
- How will we know if we are on track toward our intended destination – Reply to this question is expected to establish a mechanism to evaluate progress in allotted task or project.
HOW TO ASSESS CURRENT SITUATION?
Being a strategic business partner means carrying out HR activities with perspective of attaining long-range goals of the organization in mind. To do this following below mentioned strategies can be helpful:
- Try to clearly understand how the various organizational components interact and recognize the long-term implications of HR decisions. The impact of HR decisions must be thoroughly researched and analyzed before changes are implemented.
- Have a deep insight of business basics, including finance, marketing, sales, operations and IT and all other back office or key tasks. These skills help with budgeting and with maintaining a workforce with the correct mix of skills.
- Develop and exercise analytic skills directed at answering “the why and the what.” This may mean spending more time on so-called translational work like training business leaders, planning and implementing HR practices that effectively execute strategy, and helping teams manage change and then on transactional work like recruitment, training, human resource information systems and other traditional HR functions
- Conduct a strengths, weaknesses, opportunities and threats (SWOT) analysis of their organizations. The SWOT approach offers a clearer picture of customers, markets and competitors.
HOW TO ALIGN HR FUNCTION WITH ORGANIZATIONS BUSINESS STRATEGY?
For HR departments of organization , intradepartmental strategic planning can be a good way to start the functional alignment process. However, regardless of whether strategic planning begins in the HR department or in another department, or is managed on an organization wide scale, the actions of the HR department will be integral to the success of the strategic plan. Thus, HR professionals must take care to align the HR function with every aspect of the strategic plan, even if the strategic plan does not explicitly address HR issues. Recent SHRM research reveals that HR professionals foresee significant workplace challenges, including rising health care costs, the retirement of large numbers of Baby Boomers and the increased demand for work/life balance. Retention programs, work/life programs, succession planning, and health, safety and security programs are among the HR efforts that are viewed as key workplace challenges through which HR can strategically contribute to organizations. The HR alignment process is often driven by workforce composition issues. Although every organization’s particular strategic plan is unique, the demographics and other characteristics of the available workforce have a major effect on the way businesses are staffed. In turn, the way organizations are staffed has a significant impact on the execution of the organization’s strategy.
HR professionals should monitor and respond accordingly to factors that may affect workforce composition, including the following factors mainly:
- The Age Factor: The age of the existing employees, the age of the available workforce and the patterns of retirement for older workers and for the entrance of younger workers can significantly affect workforce availability.
- Current economic Scenario: LikeUnemployment rates, natural disasters and political changes can also have an impact the availability of workers.
- Diversification – Key aspect of globalization that will affect almost all organizations is the increasing diversity of the workforce. Another aspect of globalization is the economic incentive to outsource labor and production activities to wherever such costs are lower. A third, and related, aspect is immigration, both legal and illegal, in the United States and abroad.
SWOT ANALYSIS AS A STRATEGIC TOOL OF DECISION MAKING IN HR –
Assessment of the current situation or scenario can be understood for strategic decision making by conducting a SWOT analysis. This analysis includes an internal assessment of the organization’s capabilities and limitations as well as an external environmental scan to review its customers, markets and competitors, and to forecast to external opportunities and threats.
Major areas to consider during an external scan include economic, demographic, political, social and technological trends. An analysis of customers, markets and competitors is used to determine how the market is changing, to predict who the future customers will be and to analyze competitors in the marketplace.
When conducting a customer/market/competitor analysis, HR professionals should answer the following questions like
- What business are we doing?
- What is approach and trends in the world which are been followed in sort of business, which we are doing?
- What business strategies can be changed or needs to be changed?
- What are our resources?
- What are our core competencies?
- Who all are our competitors?
- How will we compete?
SETTING HR OBJECTIVE AS APART OF STRATEGIC PLANNING –
Setting strategic objectives is most important part of the strategic planning process. Therefore, these objectives must be aligned with the organization’s mission, vision and overall strategy. Strategic objectives will vary from organization to organization.
To identify whether strategic objectives lays a solid foundation for success, HR should consider the following questions before formulating any plan or strategy:
- Have we communicated the benefits of obtaining the defined objectives?
- Are the strategic objectives relevant to the organization’s position in the external market? For example, do they consider competitor positions, organizational size and financial strength?
- Do the strategic objectives recognize the organization’s strengths and weaknesses?
- Do employees throughout the company understand how these objectives affect them and how they contribute independently and collectively to the defined objectives?
- Are the strategic objectives realistic and feasible? Unrealistic objectives typically result in disappointment for all involved.
- Have timelines for benchmarking progress and targets for completed objectives been set?
- Will the organization realistically be able to identify the success or lack of success in the accomplishment of strategic objectives in some quantitative fashion?
- Can the strategic objectives be linked back to the organization’s overall strategy?
For example, A Company X , may identify in its strategic planning analysis a need to improve the talent acquisition process. The strategic objective to address this issue is to design selection criteria to ensure best-fit hiring while reducing the time-to-fill positions.
Once a key initiative is identified, the organization should do the following:
- Continuously ensure that the objective and action plan are aligned with the organizational and HR strategy.
- Identify the primary actions required to achieve the objective.
- Set milestones for each action, and plan for contingencies.
- Identify the required resources, including budget and staff.
- Establish success measures.
- Communicate key messages.
Ultimately, a strategic objective is only as good as the overall strategic plan.
At this step of the strategic planning process, the focus is on specifying short-term answers to the question “How do we get there?” Specific, concrete short-term objectives that can be completed within six months to a year should be established to answer this question.
Although many organizations engage in strategic planning, very few of them believe they are highly successful at strategy execution. According to a survey by the American Management Association and the Human Resources Institute, only 3 percent of executives polled said their organizations were very successful at executing corporate strategy, whereas 62 percent stated their organizations were moderately successful. However, the companies that reported relatively high success in strategy execution were more likely to realize favorable revenue growth, market share, profitability and customer satisfaction.
Though every organization has its own strategy execution challenges, this study found that mastering the following areas is essential to successfully implementing strategic plans:
- Clarity of communication.
- Alignment of practices.
- An adaptive organizational infrastructure.
- Resource management.
The single greatest barrier to executing strategy is the lack of adequate resources, the study found.
MONITORING AND EVALUATION
The final step should be establishing a mechanism to monitor and evaluate progress toward the achievement of strategic objectives. Most organizations conduct annual or quarterly strategic reviews for this purpose. These reviews do the following:
- Determine whether the organization is on track to achieve key objectives.
- Provide the opportunity to identify and adapt to significant internal or external changes that affect the strategic plan.
- Update annual action priorities.
Some organizations may find that systems or tools such as balanced scorecards, bench marking and dashboards are helpful for keeping focus and monitoring results which are found as output.
Thus, it is needless to mention that role of HR as a strategic partner is critical and inevitable in success of any organization and the organization failing to take strategic HR decisions are bound to fail or even they can succumb to survive.