New Manager

Why HR needs a role in business strategy

Anubhav Srivastav | Updated on October 21, 2014

Hey, has anybody called HR to this meeting?

With most companies touting their people talent as a strategic advantage, it’s high time that HR too played a pivotal role in strategy

Strategic work today is considered to be a high profile role in any organisational set-up. While most of the functions like sales, finance and marketing are perceived to add value to the business strategy of an organisation, the human resource (HR) function is often thought of to be lacking in strategic outlook. Even research (HR Outlook: A variety of leader perspectives, Jan 2013) conducted by the Chartered Institute of Personnel and Development, a professional association for HR management professionals showed that nearly one in five (18 per cent) business leaders are unaware of HR's contribution to business strategy.

Additionally, 18 per cent say senior HR professionals have no involvement in business strategy at all. These results are not different from reality in India. There are very few companies that have their HR heads as board members.

Given that every company today considers its “talent” as a strategic advantage, is it not strange that the HR policy makers are yet to get a “strategic” role. HR's ability to influence wider business strategy is often at the heart of many recent discussions about the function's purpose and potential. In fact, according to a global study conducted by the Economist Intelligence Unit in 2012, 70 per cent of CEOs want their HR directors to be a key player in strategic planning. And HR as a function has the luxury of being one of the only functions to touch every part of an organisation, from the highest authorities in the board to people on the shop floor.

The days of HR only being about implementing processes and managing employee relations are a thing of the past. There is an increasing need for HR to play much more meaningful roles. This implies driving the conversation around business direction, including things like where to invest in resources and top-level talent issues, such as leadership development, and how to develop and manage the talent pipeline. But how can all these be achieved?

Understand business: An HR strategy can never be created in isolation (without considering the business and other factors); otherwise, it's just the usual HR functions. It is important for the HR professional to understand where the business is heading, what kind of talent is needed, when is it needed, in which location/s, for which customer, and at what cost. Such knowledge would help develop an effective people strategy to help the business achieve its defined goals. And thus, changing the role of HR professionals to that of a strategic enabler. The HR director must become more accountable for defining, managing and implementing the people strategy of the organisation and support in the efficient running of an organisation.

Leverage the power of data: Relevant data makes any statement more believable. If HR wants to play a role in the strategic space, it is important for them to understand and talk relevant numbers. According to a research conducted by Korn/Ferry,a leading talent management firm, ‘What makes an exceptional HR leader,’ released in July 2013, global business leaders list commercial acumen as the most valued competency for HR professionals.

Honestly, it is not just about meeting the expectation of business leaders but also about having right time data and the ability to understand it to help in better decision making.

Technology & change management: In today’s world, when every sphere of life is impacted by technology, it is equally important for the HR leader to leverage the vast potential of new age technological innovations. The days when role of technology was limited to automation of processes are long gone. With social media coming in, technology can be used as a sourcing tool, as well as to engage employees across locations. It is high time that the HR plays the role of a change and transformation agent and benefit from technology. Smart use of technology systems would result in efficient talent management and help HR in playing a significant role in strategic decision making.

Match strategy with action: It is essential for HR professionals to ensure that there is a clear line of thought between business strategy and HR actions. They need to think of appropriate ways of ensuring that services are delivered effectively and think through new plans and strategies for enabling businesses in achieving their goals. Excellence in HR operations is the basis for the HR professional to perform effectively.

One thing that can help here is to take a judicious decision about outsourcing some transactional activities like payroll, compliance, document management and query managementso that the bandwidth that is released can be utilised for strategic tasks. If the above four discussions are considered, there would be fewer barriers for HR being a strategic player. If the HR professionals think holistically about their projects, understand the business and talk to stakeholders from different functions in business terms with real analysis, nothing can stop them from being the strategic enablers in an organisation.

The emphasis once again needs to be on basics, focus on analysis before solutions, set clear objectives, and evaluate outcomes among other management tactics. The journey from staff room to the board room would then be a much easier ride!

The writer is Head, HR Transitions and Consulting, PeopleStrong HR Services Pvt. Ltd

Published on October 21, 2014

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