We can all agree that strategy determines our direction and priorities. As organizations identify the critical link between HR practices and organizational success, how can we, as HR professionals, position this link? The strategic importance of HR cannot be underestimated. Its role as the liaison between employees and the organizational effectiveness is a vital one, especially given the highly competitive nature of the workplace today.
The best-known HR model is the Standard Causal Model of HR Management which is derived from many similar models published earlier. It shows a causal chain that starts with the business strategy and ends, through HR practices, with improved financial performance.
Standard Causal Model of HR Management
This model shows how HR strategy and practices that are aligned with organizational strategy lead to successful business performance. HR practices such as hiring, training, performance management and compensation lead to stronger commitment, quality output and engagement. The goals of strategic HR management are to:
- Advance flexibility, innovation and competitive advantage
- Develop organizational culture
- Improve business performance
So, what questions are important for HR to ask in order to position itself as a true business partner?
- Do we thoroughly understand the company’s business objectives and initiatives?
- Do we have the capability and skills to support these objectives and initiatives?
- Do we know how the company’s future direction will change HR requirements?
- Do we have HR staff and practices that can accommodate future company growth?
- Do we have a clear assessment of the tools required for employees to be successful in their jobs today and in the future?
- Do we have a performance management process that recognizes and rewards talent?
- Do we have a retention strategy for key talent?
- Have we researched emerging opportunities and threats to our workforce?
- Have we developed an engagement strategy for the company?
- Have we developed a robust and effective training and development strategy for all employees?
- Have we developed a succession plan for the company that will protect its vulnerability when employees are promoted or leave the company?
- Have we developed a compensation and benefits program that is competitive?
- Have we developed guidelines and best practices for the use of social media?
- Have we introduced a company-wide communication strategy and plan?
- Do we support the company in understanding the diverse needs and motivations of the multiple generations currently in the workforce?
Answering these key questions will provide a road-map for HR departments in establishing their HR strategy. The benefits of a strategic HR management approach include:
- Strategy that aligns with the organization’s strategy
- Increased engagement and job satisfaction
- Increased employee retention
- Better work culture
- Improved rates of customer satisfaction
- Efficient resource management
- Higher levels of productivity
When HR practices and outcomes hit their marks, they will lead to better performance. When we recruit the right people, train and develop them and retain our key talent, the company’s performance increases.
For future information and examples of effective HR strategies, check out: HumanResourcesMBA.net