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What is Strategic HR?
You may have heard the phrase “strategic HR,” but what exactly does it mean? Here's our answer for non-HR professionals to easily understand.
In the human resources (HR) industry, it is common to hear the phrase “strategic HR.” But what does this mean to the average small business owner?
Strategic HR involves researching, planning, developing, and implementing HR initiatives to meet your company’s goals. Because people are at the heart of HR, the purpose of every strategic HR move is to align the right people with the right incentives to accomplish your company’s overall business strategy.
To help you understand in layman’s terms, here is an analogy to help break it down.
Strategic HR Analogy
Let’s say you have a goal to lose 20 pounds this year. What is your goal one week from now? One month from now? Six months from now? To help you stay on track, you write down your target for each of those periods.
If your goal is to lose half a pound per week, what is your plan on a day-to-day basis to help meet this goal? In the event you do not meet your goal one week, how will you make up for it the following week?
While exercise and calorie counting may be at the heart of this goal, your schedule may not realistically fit in exercise five days a week. Which alternative options do you have? Can you shift your work schedule to accommodate exercise? How about increasing your water intake? Would meditation or an earlier bedtime help you meet your goal? Are there healthier meal choices you could try? Your plan to lose 20 pounds may look very different from the next person’s.
The same is true with strategic HR, as it all depends on the company and their objectives.
Strategic HR Examples
The purpose behind strategic HR is to align the right people and provide the right incentives to accomplish business goals. It includes these five key areas: recruiting, compensation, learning and development, performance, and succession planning.
Recruiting
How you word your open position and where you share the position will determine the number and type of candidates you receive. Is it a remote job, a hybrid position, or in-person? Do you provide an online applicant tracking system or require resumes to be emailed? Having an outdated system to compare candidates will be an immediate turn-off to many professionals. You should also consider your hiring and communication processes and how they will be perceived by applicants.
Compensation
What level of compensation are you planning to pay your employees? Will you provide below average base wages with performance bonuses and stock options, or will your pay strategy be leading the market with a higher salary and fewer monetary incentives? What does your benefits package look like? Will you offer traditional health insurance and similar benefits offerings, or will you provide a benefit dollar? Does your company want to offer tuition reimbursement? You will need to research which type of benefits are most attractive to the workers your company would like to hire.
Learning and Development
Nearly every employee has a learning curve to understand their role, but what level of cross training does your company need to implement to encourage development and productivity? What is your strategy to teach the knowledge and skills your employees need to be successful? Once they achieve advanced knowledge and skills, what options are available for raises and advancements?
Performance
Managing performance is key to achieving business outcomes. Employees need to have clear expectations, have measurable goals that are tracked, and receive monthly one-on-one coaching to know where they stand with their ongoing performance. What are your incentives for meeting performance objectives? Are there consequences for being below par?
Succession Planning
Each company has critical positions that must be filled for the business to succeed. Succession planning means identifying those critical positions, determining the key competencies and skills to perform those roles, and then developing employees to fulfill those positions. If the unexpected were to happen and one of those roles suddenly became vacant, what would happen to your business? Strategically being prepared for the unexpected enables your company to pivot on a dime without having to regress or make a hasty decision to quickly fill a critical position.
What Strategic HR Does Not Include
Employment in general requires administrative duties such as payroll processing, administering benefits, managing paperwork, and other mundane requirements. While these tasks are necessary to maintain compliance and avoid penalties, they are transactional in nature and become an interference to developing and carrying out an HR strategy.
To help your company stay focused on strategic HR initiatives to accomplish your business goals, consider outsourcing your transactional items to a PEO (Professional Employer Organization) like Stratus HR. Book a free consultation today to learn more!