Aligning HR and Business Strategy: How Can You Best Execute It?

 

Transitioning to the rapidly changing situation has necessitated C-suite leaders to reconsider and acclimatize their HR strategies and tactics to monitor shifts in business strategy and assure their organization’s survival and growth. Strategic planning is no longer a once-a-year, set-it-and-forget activity. HR and business strategies must adapt to today's rapidly changing business environment.

Creating a go-to-market or business strategy is no easy feat and involves numerous considerations. Effective business strategies rely on the input of various people across many departments, involving discussions from brand messaging to product roadmaps to sales processes. Human Resources (HR) is one of the few departments with a 360-degree view of the organization and continues to play an important role in organizational strategies.
 

According to McLean & Company's 2022 HR Trends Report - CHRO Priorities, when HR is a partner, organizations are:
●    1.4 times more likely to be highly effective at quickly changing at scale to capitalize on new opportunities.
●    1.3 times more likely to be highly effective at generating and implementing new ideas.

Furthermore, the report states that the involvement of HR partners in the planning and execution strategy has risen from 35% in 2019 to 45% in 2022.

Let's walk through how HR leaders can help shape and incorporate the business strategy:

HR leaders ensure that employees show up and perform to their full potential. This demonstrates the link between employee-first initiatives and a chance to strengthen business strategy. As a result, they can translate business strategy into workforce strategy.

However, HR is always looking for an answer to the question, "How do we ensure that we are propelling our business?" HR leaders must not only establish a link between employee and business success but also move the needle in that direction.

All of it narrows down to understanding the business strategy. Pose the following questions:
●    What are we trying to achieve?
●    What are the objectives of the organization?
●    How can we better align our people's initiatives?

The highly unpredictable business environment places enormous pressure on the HR function to distinguish tactics that contribute to enterprise success. The Chief Human Resources Officer (CHRO) must elucidate organizational objectives into feasible strategic practice, but they must also establish objectives that reorient HR’s functions to generate business value.

These five steps can assist in the creation of an effective HR strategy that aligns with the organization’s business objectives:
●    Understand your company's mission, strategic plan, and business objectives.
●    Determine the capabilities and skills required to achieve those objectives.
●    Analyze the HR function's current capabilities and skills, and recognize gaps between the existing state and the organization's future needs.
●    Create HR goals to fill gaps and criteria for assessing effective strategy execution.
●    Propagate the HR strategy.

This approach will lead the strategic plan as well as any HR transformation approaches necessary to transition the HR function from its present state to its desired future state. To do this efficaciously, leaders must:
●    Determine how well the core functionality and the HR business model are currently operating.
●    Determine the next stages and resources needed for short, mid, and long-term objectives.
●    Ensure that strategy and resources are constantly aligned to capitalize on potential opportunities and respond to fluctuation as needed.

Establishing a strategic plan is only the first step; successfully incorporating it into a strategic HR plan is far more difficult. The process backfires for various reasons, including a lack of understanding of business objectives and deficiently defined success measures. The recent uncertainty in the market necessitates measures to maintain the strategy aligned as the business needs to transition. Being programmatic helps in the effective execution of relevant strategies.

●    Align with the organization strategy: Human resource strategy should always align with business strategy and organizational priorities.
●    Set goals as part of the strategy: Consider what long-term success looks like for the HR department and how to prioritize objectives to sustain and support corporate strategy. Make a prioritized checklist of goals and objectives and assess the gaps between where you are now and where you need to be.
●    Establish criteria for assessing strategy implementation and adaptation success: After establishing the goals, identify four to seven key performance indicators (KPIs) that define the HR function's current performance state. Make sure these indicators are precise, measurable, and clearly linked to the expected outcome, and use them to measure performance in the future.

Tip: Construct a simple and succinct statement that conveys the fundamentals of the strategy and encapsulates the key goals that the HR function will concentrate on over the next year. This enables your organization's HR professionals and employees to make a significant contribution to enterprise goals. Customize your communication to each stakeholder group to guide employees in their decision-making.

CHROs have always been entrusted with gearing up their organizations for the future workplace. However, the pandemic has redefined the future of work in unpredictable ways, ranging from increasing pressures for a greater human-centric employee value proposition and more streamlined employee satisfaction.
Several key trends will necessitate a strategic approach from HR executives. They are:
●    The growing probability that high turnover levels will become the mainstream, transforming the Great Resignation into the Sustained Resignation
●    The continual challenge of implementing hybrid work models that support employers and employees.
●    The need to provide more compassionate and intent career opportunities to meet people's growing desire for more personal value and purpose in both work and life.

Given the increasing volume of emerging developments, HR leaders must prioritize which ones to focus on when developing HR strategies. This necessitates a three-stage trend analysis:
●    Identification: Recognize trends that may impact how, when, and where tasks are completed; and how work might look in the near future.
●    Interpretation: Recognize the significance and implications of future of work trends for your organization.
●    Prioritization: Include a wide range of stakeholders in the selection process of key parameters. Prioritize trends based on objective assessment and thorough overview to ensure buy-in.

HR departments nowadays handle much more than just hiring, onboarding, and entitlements. Aligning human resources with business strategy can improve employee engagement and performance and ensure teams are aligned to support the organizations in achieving their strategic goals.

Ajai Mehrotra is Sr. VP – Human Resources at Infopro Learning. With 20 years of experience in the IT & service industry, Ajai demonstrates a history of success in partnering with operational leaders to improve organizational effectiveness and efficiency through the establishment of a responsive HR Department and innovative HR approaches.