Why You Should Align Your HR Strategy with Business Strategy
- Human Resources
6 min. Read
Last Updated: 07/22/2021
Table of Contents
Human Resources (HR) has long taken a backseat when it comes to driving business strategy. The good news is this is changing. More businesses are embracing transformational HR and welcoming HR to the leadership table to turn HR and workforce data into a source for strategic insights that their company can action. In our 2020 Paychex Pulse of HR Survey, we asked more than 500 HR leaders in small-to-medium enterprises to identify their primary role within their organization, and most said "strategic partner." Here's why you should align your HR strategies with your business strategy.
Why aligning your HR strategy with your business strategy matters
HR's role is often split between transactional and transformational activities. Transactional activities are the day-to-day tasks, such as managing employee recruitment and onboarding processes, administering payroll, maintaining employee records, and overseeing performance management. These tasks can be so time-consuming that HR practitioners don't have the time to focus on strategic or transformational planning and interventions. Fortunately, automation has freed up many repetitive tasks and, in some cases, allowed HR professionals to take on more of a transformational role within their organizations.
Transformational activities focus on employees' experience and journey within the company, beginning with recruitment, hiring and onboarding. They require keeping employees engaged, helping them understand the company's vision and values, encouraging an open-door policy, providing opportunities for growth, and recognizing employee achievements.
Placing emphasis on these transformational activities can ultimately have a direct impact on your bottom line. Why? Engaged employees are likely to stay with the business longer, provide better work output, and be more enthusiastic about their contributions. As a result, companies with highly engaged employees tend to benefit from increased productivity, improved employee retention, and growth.
How your HR strategy can help you meet business objectives
A critical step in showcasing the business value of your HR transformational activities is to gain the confidence and buy-in of the CFO or controller, and the way to do that is to connect the dots between your actions and business results. In short, your HR leaders must learn how to "speak the language" of financial decision-makers and other business leaders by demonstrating the connection between improving talent, and increasing engagement and productivity.
Reach your business objectives by working with your HR department to:
1. Align your staffing strategy with your financial goals
Are you investing money in expansion, or tightening budgets? Make sure your HR department is aware of your budget so it can manage recruitment and hiring plans accordingly. Your HR team can also conduct a skills gap analysis to be more strategic in their recruitment, making sure they're hiring employees who meet predetermined business goals. A skills gap analysis can also help you identify employees who need upskilling or reskilling to improve their performance.
Your teams can have a big impact on your business metrics. For example, a poorly performing team can affect customer satisfaction and, when customers aren't happy, profits may drop. A team of talented, engaged employees is worth its weight in gold. The return on investment you can gain is higher quality work, increased productivity, and more innovation — all of which can contribute to your bottom line.
2. Establish a business continuity plan for when a crisis arises
In response to the COVID-19 pandemic, many companies were forced to cut costs or temporarily close their doors, causing many to reduce their employee headcount. Decisions like these can have severe repercussions, both financially and on employee morale. Often, remaining employees have to absorb additional work, or they may feel anxious about their job security. That's why HR should be involved in creating a business continuity plan (BCP) to help alleviate business disruption during a crisis.
When business disruption occurs — whether it be the result of an infectious disease outbreak, natural disaster, or something else — having a business continuity plan can help minimize its impact on your business and your employees. A BCP can include the following:
- Creating an emergency checklist and training staff on procedures long before a disaster strikes.
- Ensuring employees have the resources they need to work remotely, if needed.
- Temporarily freezing recruitment during a financial crisis.
- Implementing furloughs, limiting shift work, and reducing overtime.
- Placing projects involving contractors and consultants on hold.
- Having a communications plan in place to keep employees updated on how the company is managing the situation.
- Securing and backing up company data for easy recovery. Consider switching to a cloud-based HR system that will ensure employee data is not lost and you can run your payroll as normal.
- Building your financial resources to carry you through the crisis and help the business recover once the crisis has passed.
3. Manage organizational change
When organizational change happens, it can be uncomfortable — and often, stressful — for employees. This could include major changes — such as merging with another company, organizational restructuring, or shifting the company's culture — or minor changes, such as implementing new processes, switching platforms, or making adjustments to teams or leadership.
To help make the transition as smooth as possible, your HR department should be aware of the company's strategic vision for the change. Let's look at two examples.
- In a major change such as a corporate restructure, employees may worry about their job security. If HR knows your strategic vision for the restructure, they can allay employees' fears to help make the transition smoother. Doing so may avert a situation where employees "jump ship" or begin looking for a job elsewhere. In the long run, being able to retain your talent during times of change can impact your business' bottom line, as it can save you the time and money of having to recruit and onboard new staff.
- In another example, let's say you're changing the structure of your workplace. For instance, if you're moving from a conventional workforce to a hybrid structure, you'll want the help of your HR team when it comes to managing the process, so as to cause minimal disruption for employees. Or, if you're planning a move towards a remote working model, your HR team can provide insights into the processes and technology needed to ensure employee productivity in a digital work environment.
Need help aligning your HR and business strategies?
Looking to integrate HR strategy into your overall business strategy, but unsure where to begin? Start by holding regular meetings between HR and top management. And, consider working with a dedicated HR service provider, such as Paychex, that can provide the guidance you need to help align your HR strategy with your business goals.