In most companies, the core function of the HR department is limited to handling administrative tasks. Often, no need is felt to align functions and strategies of the HR department with the company’s strategic plans. Even where such alignment exists, it doesn’t go beyond a forecasting function. The irony in all these situations lies in the fact that HR is all about people, which forms the core component of a company and its strategic plans. So, if you too have been reluctant to give your HR department a seat at the strategic planning table, it’s time to think about a change and let HR managers participate in the boardroom decisions.
Business Strategy and HR Strategy
Business strategy of a company emphasizes how it plans to succeed in its chosen marketplace. In other words, such a strategy facilitates the establishment of a direction that the organization should pursue in relation to its environment. An overall business strategy usually includes plans related to innovation; quality leadership; cost reduction; value addition; growth through joint ventures, acquisition, etc; and customer focus. Such strategies answer three fundamental questions, namely:
· 1. What (mission, vision, goals),
· 2. How (functional strategies, organization design, cost and resource allocation, planning, budget requirements), and
· 3. Who (performance management, development, workforce planning)
The aim of HR strategies is to manage the human resource of the company in an efficient manner so that the organizational goals are achieved. Therefore, such strategies focus on what the company plans to do with relation to its HR practices and policies. The way human resource is motivated, deployed, managed and retained has a huge impact on how well the business strategies get implemented.
To determine the best strategy for the company as well as its employee, the top management should discuss plans with the HR managers and their counterparts from other departments. Such participation would ensure that HR is aligned with strategic planning of the business, and is able to bring changes that help the organization achieve its goals.
Alignment of HR and Business Strategy
Once HR is allowed to expand its traditional administrative role, it becomes capable of creating a significant impact on the aspect of value creation for the company. This is why HR strategy needs to change with business strategy. In other words, HR strategy should be properly aligned with the company’s business strategy. It should be kept in mind that it is the human capital of an organization that leverages all other facets of business. So, the HR department should make sure that the company’s human asset s is successfully aligned with its business strategy. No wonder why a growing number of organizations vote in favor of strategically integrating HR strategy with their business strategy.
A company performs efficiently only when its employees display the adequate levels of knowledge , abilities, and behavior, and have a conducive work environment to handle their job responsibilities. To ensure that this happens, business and HR strategies need to work in tandem. After all, a company can’t enjoy sustained competitive advantage unless it gives its human resources the due credit and makes HR strategy match its organizational strategy.