HR Insights -2 min

What Does “Strategic HR” Really Mean? (And are you doing it?)

June 29, 2015

Have you ever gone fishing? Some people love the relaxing rhythm of casting and reeling, while others are competitive about actually catching fish. People who fish to bring home dinner may become frustrated if the act of fishing doesn’t actually contribute to catching fish. HR can feel the same way. Some of us love maintaining the administrative HR tasks—making sure everyone’s getting what they need on a basic level—while others want to be involved in the executive meetings and contribute to the company’s business strategy.

We’ve heard a lot about “strategic HR” over the past several years. We all want to make a real difference in the direction our companies are headed, but many of us are overwhelmed by the concept of what it really takes to be strategic.

By definition, strategic HR is managing HR in a way that supports the company’s long-term business goals and outcomes. In essence, you go way beyond the administrative duties HR has been known for and apply HR principles and practices to overall business strategy.

The truth is, most of us are capable of operating much more strategically than we do; yet, less than 20 percent of HR pros are seen as strategic partners. Where are we spending our time? Do leaders trust us as a resource or sounding board when difficult situations arise? Or is our voice heard when execs are assessing future plans? The personal strategic level we’re operating on depends on which activities we spend our time on.

Did you know that execs want HR leaders who can be better business partners?

Here are five tips for how HR professionals can earn respect in their companies’ strategic activities:

1. Get formal training on business competencies 

Before you can start contributing an HR strategy, you need to understand how strategic business works. When you have training in areas like leveraging networks, data judgment, business acumen and leadership, you can give thoughtful, helpful suggestions. 76 percent of business leaders depend on collaboration in developing their businesses’ strategies, and that’s where you can step in and show off what you know.

2. Know your company inside and out

Execs need team members who understand the business’ metrics, financial model and organizational risks. Depending on how long you’ve been at the company, you probably understand many of these things more than you realize. To dig even deeper, take some time experiencing work “on the front line” and ask questions about its history and really learn the products. A recent study (that spanned an impressive 15 years) revealed that HR professionals who understand business are uniquely capable of “linking business strategy with talent management.”

Want to know how to get your company to buy into HR?

As a side note, focusing on these first two areas can triple an HR professional’s value to a company’s business strategy decision makers, but they will also impact business strategy by 38 percent.

3. Develop metrics and analytics

Learn business metrics like profit, margin, ROI and TSR, and you’ll be a huge asset to strategic business leaders. But by developing your own metrics of turnover, employee attitudes, bench strength and performance distributions, and integrating them into business metrics, you’ll have an invaluable understanding of your people, as well as the vested interest of the leaders who are driving the business. Since 78 percent of business leaders are using data to make business strategy decisions, you’ll put yourself in a great position.

4. Create data-based strategies

It’s important to assess emerging trends and HR best practices, but actions and policies of the HR professional should always be propelled by data. Data can drive practices that support emerging trends and develop into viable business opportunities, or may reveal that current business strategies more appropriately align with the organization’s goals.

5. Assess organizational readiness

By combining business and HR metrics, you’ll be able to evaluate whether the organization has the resources, manpower and support to implement different strategies. According to researchers Edward E. Lawler and John W. Boudreau, HR professionals who regularly perform this activity are much more strategic and effective since the recommendations that come from this type of analysis bridges HR with the broader business goals and strategy.

Of course, you can’t neglect the basics. You know you’re capable of giving strategic insights and working with leaders in strategic areas, but don’t forget administrative responsibilities and compliance with rules, laws and regulations. If they’re not under control, the analytics and assessments you worked so hard to get noticed for will go unmanaged and could become a stumbling block. You must continue to innovate basic administration while providing strategic input to reach your full potential in HR.

Strategic HR doesn’t need to be an overwhelming, abstract concept. Whether you are at a young company or an established organization, you can contribute to future growth and success by focusing on strategic business decisions.

Steve Holiday