It has become almost a cliché to say that service is everything. Companies, local, international and multinational alike, are gaining competitive advantage through differentiating their products and providing superior service. Everyone knows that, everyone believes that, and everyone tries to achieve that. However, despite this ever-increasing focus on the human capital of organizations, the Human Resource function remains a support function in most organizations in the region. The concept of Human resource as a strategic partner helping organizations achieve their overall objectives is alien to many business owners and regional organizations despite the magnitude of leverage HR can provide. According to Dr. John Sullivan from San Francisco State University, HR managers who function as business partners have the following traits in common:
- Solve business problems.
- Play the role of productivity consultant, helping managers recruit and retain the best workers, and motivating all employees so they are as productive as possible.
- They are forward-looking, monitoring the environment and anticipating business opportunities and problems.
- They are metric-driven, proving and measuring the business impact of everything they do.
- Shift burden of people issues, to managers and employees.
- Coach managers and give them choices, but don’t actually solve their people problems.
- Use HR tools to beat the competition.
- Build a sense of urgency, promoting continuous learning and improvement.
- Use technology to better manage people and HR tasks.
- They are flexible, rapidly redeploying people and information as the situation demands.
If this was a wish list of everything that a strategic HR function should do, ask yourself: are these ten activities important to your organization? Would they add value and impact the bottom-line positively? And finally, how many of these does the HR Department in your organization actually fulfill? If you value these activities but do not feel that they your HR department is addressing them, then its time to re-consider your HR department’s overall role.
A strategy, in the simplest sense, is a way of doing something – a game plan for action. Usually it involves the formulation of a goal and a set of action plans for accomplishment. A strategy also implies the consideration of the competitive forces at work and the impact of the outside environment on the organizational goals and actions. With this somewhat basic definition in mind, we can identify the basic characteristics of a strategic human resource function as one that:
- Recognizes the impact of the outside environment.
- Recognizes the impact of the competition on the dynamics of the labor market.
- Has a long-range focus (three to five years).
- Focuses on the issues of choice and decision making – i.e. is proactive rather than reactive.
- Considers all employees (including skilled and unskilled laborers).
- Integrated with the overall organizational strategy and functional strategies.
Below is as a more detailed explanation of each of these points:
Recognizes the impact of the outside environment.
Outside environment includes everything from laws, economics to social conditions and international political forces. Strategic HR recognized these forces and resultant threats and opportunities. For example, before General Motors opened its Saturn Plant in Spring Hill, Tennessee, the HR department was one of the key decision-makers since the area lacked experienced, qualified, technical workers. Human Resource helped formulate an appropriate strategy and created an internal capability to recruit, train and transfer valuable employees who would then be able to develop recruits locally to sustain the plant.
Recognizes the impact of the competition on the dynamics of the labor market.
Employers compete for employees just like companies compete for customers. Meanwhile, recruitment and training are costly both in terms of money and time. Strategic Human Resources balances the costs with competitive salaries in order to retain the value-adding, knowledge workers therefore, reducing long-term costs.
Has a long-range focus (three to five years).
In the same manner that an organization creates 5-year strategic plans, the human resource function needs to mirror these plans in order to meet organizational goals and objectives. When your company embarks on aggressive marketing and sales initiative designed to increase its market share but continues to lose sales representatives to competition, something is wrong!
Focuses on the issues of choice and decision making – i.e. is proactive rather than reactive.
Strategy means choosing between alternatives and making major decisions about human resources that will commit the organization in a particular direction. Strategy usually has a problem-solving or problem-preventing focus. At the organizational level this focus might seem a little abstract (like Ford’s Quality is Job 1, or FedEx’s Absolutely, Positively), but at the HR level, it begins to take a solid meaning that can be implemented, evaluated, and developed.
Considers all employees (including skilled and unskilled laborers).
The strategic human resources function deals with all employees, from unskilled laborers to management development and training. It is just as concerned with executive pay and benefits as it is with hourly wages. Achieving the strategic objectives of the organization is everyone’s business, not just top-management’s responsibility and finding a way to ensure that this responsibility is shared and cascaded down to all levels is one of the primary functions of a strategic human resource function.
Integrated with the overall organizational strategy and functional strategies.
The human resource strategy should be integrated with corporate strategy. Former Chairman of the Society of Human Resource Management (SHRM) remarked that “it is imperative that the Human Resource Professional establish goals and objectives that support the corporate goals.” If the corporate strategy is grow and dominate a market, than human resource strategy should focus on the rapid acquisition and placement of employees. If reducing costs is the organizational strategy, then human resource needs to optimize performance and freeze hiring. The key idea is to coordinate all of the company’s resources, including human resources, in such a way that everything a company does, contributes to carrying out its strategy.
When organizations achieve excellent coordination and integration of their various functions, they are able to maximize their results; they realize a state of synergy where the value of the whole is greater than the sum of the individual components – also known as economies of scope.
Differences between Strategic HR and Traditional Personnel Approach
|Dimensions||Strategic HR||Traditional Personnel Management|
|Planning & Strategy||Participates in formulating overall organizational strategic plan and aligning the HR function with company strategy||Is involved in operational planning only and executing directives.|
|Authority||Has high status and authority for top officer (e.g. HR Director)||Has medium status and authority|
|Scope||Concerned with all managers and employees||Primarily concerned with operational, clerical and support employees.|
|Decision Making||Involved in making strategic decisions.||Makes operational decisions only.|
|Integration||Is fully integrated with other organizational functions: marketing, finance, legal, production, etc..||Has moderate to low integration with other organizational functions.|
|Coordination||Coordinates all human resource activities (e.g. training, recruitment, staffing, etc.)||Mostly involved in payroll and some aspects of recruitment.|