HR leaders have long been exhorted to “think strategically” in order to get that coveted “seat at the table.” But strategic means different things to different people.
In fact, HR leaders sometimes feel unnecessarily maligned—many, in fact, do think strategically but, perhaps, not in the same ways as their senior leaders expect them to. This blog examines the biggest strategic gaps that HR leaders should seek to close.
What Does “Strategic” Mean?
What does it mean to be strategic? In this context, it could be defined as engaging in actions designed to further organizational goals–Not simply HR goals, but organizational goals. For HR, and all other departments, that means ensuring that the department’s scope of services is designed to meet and move the needle on key organizational imperatives.
Being strategic also suggests forward-looking action—not the day-to-day work of the department (e.g. evaluating applications and resumes, administering benefits, or evaluating policies), but examining potential future impact, including:
- How can we ensure the bench strength needed to handle future job requirements?
- What staffing considerations will be needed to support future organizational initiatives (e.g. expanding into new markets, introducing new products, or merger and acquisition activities)?
- What roles or positions may not be needed in the future, and how can we prepare to retrain or reposition staff currently in these roles?
The more successfully—and succinctly—HR leaders can tie their initiatives and proposals to organizational goals and objectives, with an eye toward future performance, the more likely they will be viewed as strategic. These impacts can be framed in terms of “if this, then that” statements. Importantly, though, the “then that” statements need to be framed from an organizational impact perspective.
Finally, HR should frame its messaging whenever possible from a cost/benefit point of view using hard numbers: “If we spend $ to…, we can expect to see reductions in costs/improvement in productivity of $.”
Moving Beyond Cost Center
Alexandra Connell is CEO and cofounder of Pluma, a mobile executive coaching and professional development platform. HR, says Connell, is often viewed as a cost center. Their focus is on investing in people, she says, adding: “It’s much easier to estimate a return on capital investment than on a people investment, even though in today’s economy people create the vast majority of the wealth companies generate.”
Charles Krugel, a Chicago-based management side labor and employment lawyer, and HR professional, agrees. “Perhaps the greatest strategic gap is explaining the dollar cost of effective HR management versus the potential lost profit from ineffective HR management,” says Krugel. The big buckets here, he says, include high turnover, ineffective training and development, and noncompliance with employment law.
There is an opportunity for HR leaders to shift the perspective of their contributions from cost center to key contributor. Connell points to three areas of opportunity.
- Demonstrating an understanding of the business. Yes, a key role for HR professionals is to support employees, but that’s not the end game. The value they contribute can be tied to the why of supporting employees—to further organizational success. “If HR can’t speak to what the company does to generate revenue, why it’s structured the way it’s structured, and what its upcoming business-related challenges are, they won’t be invited to the table,” says Connell.
- Clearly connecting HR strategy to value the organization’s most important resource, its people. HR has a strategic role in helping leaders see how the investment in people contributes to the current and future success of the organization.
- Considering alternative structures to more closely align with the business. Here, says Connell, there may be opportunities to us as an HR Business Partner model that imbeds HR team members in business units, reporting either to HR or to the business unit leaders, with a dotted line connection to the HR function. “If HR can be combined with an operations role, it can be seen as much more strategic and aligned with the business,” says Connell.
One very important step required to do this effectively is to fully understand what your CEO cares about most. This understanding can come through conversations with the CEO and other senior leaders; it can also be uncovered through the organization’s strategic plan, balanced scorecard or other documents that specifically outline the organization’s goals and objectives.
Communicating and Informing the Senior Team
It’s important for HR leaders to understand that the CEO and other senior leaders, and even the person they report to, do not necessarily recognize the efforts they’re making to strategically align their activities with organizational goals and objectives. They need to tell them! And not they alone. The entire HR staff can play an important role in developing, implementing and communicating about strategic HR initiatives.
This can, and should, be done in a variety of ways on an ongoing basis, including:
- In one-on-one meetings with managers and direct reports;
- In formal reports that might be made on some regular basis—e.g. quarterly;
- Through formal organizational communication channels like employee newsletters, town hall meetings, the corporate intranet, etc.;
- During annual reviews; and
- During the formal strategic planning process
And, again, these communications should convey not only what was done, but what the financial impact of the efforts were. By shifting the approach from reporting on activities to reporting on outcomes, and by presenting proposals using the “if this, then that,” approach, HR leaders can begin to position themselves as viable strategic partners.