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HR's Role in formulation of Business Strategy

More often than not, business owners dismiss the HR department as being merely functional, without realizing that they do play an important role in formulating the organization’s business strategy. The time has come for organizations to understand and accept the role played by HR with regard to formulation of business strategy to ensure better plans and effective implementation.

Here are some of the important ways in which HR helps in formulating strategies.

  • Providing information about internal strengths:

    Employees are the integral part of any strategy implementation. Therefore, it goes without doubt that you should consider your employees during formulation of business strategy. And who better to supply you with the exact information regarding your employees and their strengths than the HR department? No wonder why the most important role played by HR in formulating strategies is considered to be the ability to offer internal strength-specific information. This could include the existing strengths of employees as well as those that can be achieved through training. Having a better perspective of where you want the organization to reach in the future will help the HR analyze the current strengths, ascertain whether new candidates need to be recruited, and determine whether strategies can be implemented with some training imparted to the existing employees..

  • Providing the analytics on their own processes:

    For any HR department to survive, it has to ensure that it shows the top management how it brings in the profits. For instance, training and development of employees increase their expertise while also improving their productivity. This is often gone unseen by the top management, unless it is brought to their notice by HR professionals. Formulation of business strategy should ideally consider the importance that HR brings to the table, especially in terms of its processes leading to profits to the business. This will help ensure that strategies are more inclusive of HR needs.

  • Identifying and categorizing the workforce:

    Another major role played by the HR department in terms of formulation of business strategy is to bring to the table the exact mix of employees that the business needs, in addition to making plans to include those that they lack. Experts believe that employees can be categorized into four categories, namely those who are mission-critical; those who have certain unique skills and expertise; the ones who are the basic operators that function on a daily basis; and finally, those whose capabilities can be outsourced or retrained or terminated, depending on the strategy being developed. This is extremely important for any company, which is going through a downsizing or even those who are looking to have a leaner work force. This information is critical when ensuring that strategies are implemented successfully. By knowing your workforce, you can actually determine whether to implement a particular strategy using your existing workforce or recruit someone new.

  • Encouraging competitive intelligence:

    Finally, the HR department provides competitive intelligence, which is necessary for the formulation of business strategy. This includes information regarding pension and other incentive plans of competitive organizations as well as information regarding their strengths and weaknesses.
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