In recent years, Human Resources departments, as well as other business areas, have undergone significant changes—driven primarily by the emergence of tools that automate processes and make activities less manual and bureaucratic. In HR, it was no different.
For a long time, HR focused specifically on operational issues, such as admission, dismissal, and benefits management. However, the need arised for it focus on professional growth and development—naturally, contributing to the development of companies.
In this material, we dive a little deeper into strategic HR, its benefits for businesses, and give you some practical tips on how to implement it. Keep reading and learn more!
What is strategic HR?
Strategic HR is a term used in human resources to refer to looking at a company’s professionals strategically. To do that, HR uses data for more effective decision-making on the most varied issues, in addition to continuously striving to improve processes through technology.
But first, let’s debunk a myth: Strategic HR does not let bureaucratic issues (such as payslip control, electronic timecard systems, benefits management, etc.) fall through the cracks. It looks at employees strategically, using data for more effective decision-making, with regard to both professionals and internal processes.
In this sense, the department will act to enhance a company’s talents, helping them accomplish pre-established results and, therefore, enable the company to grow and achieve a better bottom line.
Research published by Harvard Business proves the importance of this paradigm shift in HR. The research followed 53 companies from 2011 to 2015. In terms of their economic results, it concluded that companies with good HR practices performed 51% better. Therefore, if your HR department still doesn’t operate strategically, it’s time to change it.
Is my HR strategic? Understand!
To what extent does your HR perform operational roles, but is also strategic? What must be analyzed to identify if the department needs to improve? Take a look at the checklist we’ve prepared!
1. Strategic business vision
If your HR doesn’t act based on the company’s organizational culture, it’s a sign that changes must be made. Organizational culture is the way people behave in a company, including values, rituals, artifacts, examples, incentives, and stories.
An organization’s values, in turn, determine its rituals, incentives, examples, and artifacts. But what are values? According to the Oxford dictionary, they are “principles or patterns of behavior; someone’s judgment about what is important in life.”
Therefore, we can say that an organization does not have values. The people who work there do. And this sum of beliefs and patterns is precisely what we understand as an “organization’s values”. In this sense, the whole department needs to follow the company’s culture, in everything from hiring new employees to how to deal with people on a daily basis.
2. Data analysis
As we explained, strategic HR bases its decisions, from the simplest to the most complex, on data. Just as the sales team analyzes metrics to understand its performance and whether or not it needs to implement improvements, HR also needs to steer its activities based on tangible information.
Today, there are performance management tools that enable everything from a clearer interpretation of professional performance reviews to cross-referencing data on climate surveys and team performance.
Understand: Through performance reviews, you can identify the high performers in your business. In this scenario, by applying climate surveys, you can understand those people’s perception of the company and devise effective strategies if it’s negative—thus contributing to talent retention.
3. Change agent
This topic is directly linked to the previous one. HR should not be a “fire-fighting” department. On the contrary, it must prevent fires in the first place. Thus, instead of using reactive strategies, it’s possible to design proactive actions to avoid common bottlenecks in large companies—low productivity, absenteeism, turnover, etc.
In this case, the team needs to be a change agent, in a way that encourages talents to improve their skills and competencies.
Finally, in order to identify if your HR is indeed strategic, you need to understand the department’s processes. As we said, there are performance management tools and other technologies that can help optimize the bureaucratic recruitment and selection process.
How is your HR structured? By answering this question, you will be able to implement improvements to make the team more strategic.
How can you make HR more strategic? Check out how it works in practice!
If you have found that your HR isn’t strategic yet, don’t worry! We have handpicked some tips for you to understand what actions you should take in your business. Check them out!
Some key HR indicators should be monitored continuously. These include, among others:
- turnover cost;
- employee climate;
- average time at the company;
- investment in training;
- per capita cost of benefits;
- productivity; among others.
This information will let the team be more efficient and make more effective decisions, according to the analyzed—here it is again!—data.
Use People Analytics
As we saw, having a data-driven HR department has become more than just a competitive advantage: It’s a must for all companies. After other teams have used information about their departments for more strategic decision making, now Human Resources also needs to be more effective in its actions, especially with the use of People Analytics.
Reports, surveys, and metrics alone do not do much to make the department more strategic. Example: When conducting an Employee Climate Survey, you will understand the perception of the team as a whole about several topics in your business. However, this result, without further analysis, is only a diagnosis.
For the action to be effective for the company, you need to cross-reference this data strategically, so that it determines improvements for the teams and, hence, brings better results.
Have a talent retention plan
Strategic HR is also concerned with developing a talent retention plan. In day-to-day work, you need to develop your team’s skills and abilities as much as possible. However, such development is useless if the company can’t retain those talents.
Returning to the example of your company’s high performers. Do you really know them? Again, you can understand this by cross-referencing data.
First, to identify the people who really make a difference in your business, you need to carry out a performance review process with 9-Box:
- performance review—structured review of employees’ individual performance in a given time period;
- 9-Box—a tool that lets you analyze the result of someone’s review in more detail, providing a basis for making people management decisions.
With this strategy, after finding those that stand out the most in your business, there are two paths you can take:
- employee climate survey—as mentioned, it is a diagnosis of people’s perception of their company in the most varied aspects. HR’s next step is to design actions to improve high performer engagement;
- one-on-one meetings—opportunity for leaders to be more attentive to the group’s main causes of dissatisfaction.
Although we have focused on high performers, these actions can be adopted for the entire company, in a way that contributes to the retention of your team’s main talents.
Foster a motivating environment
Another important issue for strategic HR is related to a motivating environment. As discussed, one-on-one meetings provide an opportunity to identify causes of dissatisfaction among high performers. However, this practice is recommended for all companies and for all employees, as it brings them closer to their leaders and encourages the flow of information from the bottom up.
In addition, a feedback culture should be appreciated in your business. Through this practice, your company’s professionals are more accurately steered into the best paths to follow, which allows them to develop themselves even further and, as a result, improves your company’s bottom line.
We mustn’t forget to mention the need to seek leaders who are increasingly able to manage their teams, in addition to having clear objectives and defining with their direct reports the priorities for a given period, as well as the ideal ways to achieve the desired results.
Use technology as an ally
As we have mentioned throughout this material, strategic HR is data-driven. In this sense, performance management software can be an important tool to unlock human potential and contribute to HR being more effective in its strategies. A solution like this will provide your company with the following advantages:
- run performance review cycles through a smart system;
- carry out goal management for the entire team;
- foster a feedback culture more spontaneously;
- recognize outstanding professionals through praise;
- manage one-on-ones;
- conduct employee climate surveys and cross-reference that data with employee performance, so that decisions are more strategic.
In this content, you were able to understand what strategic HR is, what its advantages are, and found tips on how you can effectively apply it to a business. As we noted, using data for important people management decisions does much more than boost competitiveness. Today, a company that relies on concrete information for decision-making certainly enjoys better results, making it possible to set increasingly challenging goals.
If you are interested in understanding how performance management software will contribute to your strategic HR, contact our team and ask your questions!