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HRM/U1 Topic 7 Linking HR strategy with Business Strategy

When business owners and managers formulate business plans and strategies, they often leave out an important component of these plans. Human resources staff are often not consulted nor invited to participate in the planning process. When marketing, sales, manufacturing or finance are asked to implement their strategies and tactics for the coming year, they may find themselves short-handed, or worse, with people with the wrong aptitudes. Aligning HR with business strategies makes sense and helps ensure the company can realize goals.

Function

With HR at the planning table, HR can forecast how many people will be needed and with what skills. HR can inventory the current workforce to see who can be promoted to new positions, who should be trained and how and what recruitment and outsourcing strategies might be necessary to fulfill the plan.

Significance

HR should take the lead in driving change management. Change is a given in today’s competitive world, and the company that manages change best will most likely best its competitors. The HR staff should train the company workforce to figure out how to capitalize on a changing business environment and train company leaders to embrace the opportunities change can bring.

Potential

If employees are connected to company strategy and goals and are acknowledged for high performance, the goals are more easily met. Engaged employees are vital to company productivity. HR can be a key player at the strategy table if it develops performance management goals based on company objectives.

Considerations

HR has a delicate balancing act to develop compensation strategies that balance company finances with employee expectations. If compensation is too low, employees leave for greener pastures. If it is too high, the company income statement can be adversely affected. HR must be included in product development efforts and ensure the right staff is on hand for this function, even if it means paying a premium in the short term for freelance or contract employees with the right skills and experience for the tasks at hand.

Effects

HR departments typically track data on the success of recruitment efforts or how many people received what kind of training. But this is not sufficient. The better metrics are those that establish the long-term links of HR to company success. A more important metric might be how well the company does at retaining key personnel, those who contribute most to the bottom line.

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