A business strategy consists of clearly defined plans, actions, and goals that map how a business will use its products or services to compete in one or more markets. Compared to most business functions, Human Resources (HR) intersects with all other departments, making it a vital part of any good business strategy.
More businesses are giving HR a seat at the leadership table and tapping into workforce data to identify and reach critical business objectives. Companies that weave HR activities such as recruitment, retention, and training into their overall business strategy gain a competitive edge that sets them up for long-term success. This article will explain the role of human resources in strategic planning, provide examples demonstrating how to align human resources with business strategy, and more.
On this page:
- The Role of Human Resources in Strategic Planning
- How to Align HR Strategy with Business Strategy
- Examples of Aligning HR Strategy with Business Strategy
The Role of Human Resources in Strategic Planning
HR is often viewed as a day-to-day administrative business unit responsible for managing talent acquisition efforts, employee benefits, performance management, training and development, compensation, and more. Given the rapidly changing nature of business, HR can no longer operate in a silo. Technology is changing entire industries at a fantastic speed and altering labor markets in a way that has a real impact on people.
With this change comes opportunity, and it requires leveraging human resources as a long-term strategic partner in business. HR can communicate business goals to personnel and help them thrive amid subsequent organizational changes. Using HR to coordinate strategic initiatives directly improves a business’s ability to remain competitive.
Other benefits of aligning HR with the business strategy at large include:
- Improving communication between leaders and the rest of the business
- Helping maintain employee and business focus on strategic goals
- Augmenting productivity
- Promoting employee engagement and retention
How to Align HR Strategy with Business Strategy
Human Resources can no longer be viewed as just a service-oriented department but rather an essential partner in business decision-making. Whether defining business goals and forming strategic plans starts with the executive team, the HR team, or another department, HR will play an essential role in achieving success.
Dramatic changes to the workplace are already underway, from increasing remote work to rising healthcare costs. Executing a strategic plan requires understanding these challenges. Knowing the long-term business objectives allows the HR department to navigate these challenges in a way that contributes to the business.
To successfully align their efforts with business strategy, HR experts must complete the following:
- Understand the business strategy and how it impacts other departments
- Evaluate external and internal workforce conditions
- Plan and implement the HR strategy that includes key performance indicators (KPIs)
- Automate applicable tasks
- Measure and evaluate results
Examples of Aligning HR Strategy with Business Strategy
A typical HR team is responsible for a range of business operations that impact how all other business units operate. Here are a couple of examples demonstrating what it means to align HR initiatives with business strategy:
Example 1: Organizational Restructuring
A corporate restructure can take many forms, from moving to a hybrid work model to consolidating departments or choosing a new corporate headquarters. No matter what the organizational change is, it will impact all employees. The restructuring can make them fearful for job security, upend their work schedule, and require them to change teams.
HR should be looped into the goal of the restructuring and play a central role during the transition. If your business is moving towards remote work, HR can find the best technology and processes to help with the change. Are you opening an office in a new city? HR can find the best local talent and onboard them. Overall, aligning HR to the restructuring goal can help retain and recruit essential employees, ultimately preserving productivity and saving money.
Example 2: Employee Retention
In a competitive job market, employees can resign for many reasons. Better pay, flexible work options, and a better work/life balance are a few common reasons. Business leaders prioritizing employee retention should tap HR to execute a plan to stifle employee resignations. HR can run an employee satisfaction survey to determine why staff leave the company and recommend changes to address them.
Example 3: Social Responsibility
More companies are prioritizing social responsibility and looking to make it a central part of their corporate values. Baking social responsibility into a business’s DNA requires significant input from the Human Resources department. Depending on the specific goals the company wants to achieve, HR might introduce diversity, equity, and inclusion (DEI) training, organize volunteer dates with local charities, or establish a plan for integrating environmentally-friendly business practices.
Example 4: Crisis Management
Nearly every business received a wake-up call during the onset of the COVID-19 pandemic. Many had to significantly cut costs, including laying off employees, dealing a blow to morale and the bottom line. For businesses eager to be better prepared for potential crises, HR should take the lead by creating a business continuity plan (BCP) to mitigate disruptions in the case of disaster.
Keeping pace with the constant change affecting business requires using HR more strategically than ever. The core responsibilities of managing employee engagement, training, performance, and benefits will always be there. Aligning HR with the business strategy is essential for unlocking productivity, sustaining growth, achieving corporate objectives, and remaining competitive. Today’s HR function is more than just administrative cost-centers. It is a crucial partner that keeps the entire business working towards the same goals.