30. March 2020

What Strategic HR Needs to Achieve Long-Term Success

Two Colleagues Talking

When I ask HR managers what they would change about their job, 80% say: I want to be more involved in strategic decision-making. On the one hand, this reaction shows that HR managers have the right attitude, because HR needs to be more closely involved in strategic decisions in order to achieve sustainable corporate success. On the other, the answer makes clear the regrettable fact that many companies have not yet recognized the importance of HR. That needs to change!

Companies Need to Recognize the Value Added by HR

We are constantly reading and hearing that companies need to be agile, dynamic and flexible in order to cope with globalization. Fast reaction times and the ability to learn quickly are essential. For most companies, this means making changes that employees need to be prepared for. And this is something HR can strategically manage and implement.

But medium-sized companies in particular are still strangers to the idea of strategic human resource management. This is due to a lack of budget and time, entrenched structures and a rigid understanding of roles, for example: "HR is in charge of company admin," as well as a lack of management backing and appreciation and, above all, no say in management decisions.

HR Needs More Time

On average, HR professionals spend 42% of their time on administrative tasks. Fifty-three percent feel they are not spending enough time working with people, even though it was for precisely this reason that most of them chose to work in HR. Source: Study by Bitkom Research and Personio

Strategic HR Work Is a Must

HR can make a vital contribution to a company's success. To be able to do so, strategic HR initiatives such as recruitment optimization and employee retention and development must be aligned with corporate goals.

The logic here is very simple: A company’s overall strategy is derived from its corporate goals. These, in turn, form the basis for developing strategic HR initiatives that will be able to meet the needs of future organizational structures, employees and processes.

To take an example from Personio: We have ambitious business goals that we want to achieve each year. Without the right number of employees (with the appropriate skills and motivation), that will not happen. Our management and head of HR are also well aware of this. So, we are increasingly investing in strategic HR. This includes employer branding and cultural initiatives as well as hiring HR staff, because it is only with sufficient HR resources that we can find new hires and retain existing employees in our other departments.

The Prerequisites of Strategic HR

Companies need to understand that an HR strategy plays an important role in corporate success. And it involves making changes – rather than carrying on doing what you have always done. These basic parameters need to be in place for the successful adoption of strategic HR.

A New Way to Understand the Role of HR

Some time ago, HR was forced to take on an administrative role. But HR professionals now need to move away from this because they are capable of so much more. They are HR strategists and important peer mentors for management. To put it simply:

  • They are consultants and coaches for all people-related issues, i.e. they create performance and development programs for employees and training for managers.

  • They initiate change projects and drive them forward.

  • They are involved in all important projects and targets and, together with managers, develop initiatives to implement them operationally, e.g. when hiring.

Additional Skills Will Be Required

In order to operate at a strategic level, HR staff need the appropriate personal and professional skills. On the one hand, these include self-confidence, an entrepreneurial and future-oriented way of thinking and an analytical and implementation-focused way of working. On the other, HR managers need to acquaint themselves with strategic ways of working and learn more about the company’s employees and the market.

HR Needs Resources

Of course, HR departments need sufficient resources in terms of employees. But having ten people in HR working solely on administrative tasks is just as unproductive as having three people doing that. HR staff need the time and space to deal with important HR issues such as employee retention. Only then can they have the greatest impact on corporate success. In this article, you will learn why low employee retention is one of the biggest HR cost factors.

Companies with high employee loyalty are 22% more successful than their competitors in the same industry. Source: Aon Hewitt, Global Engagement Database

These days, HR does not have to struggle with paper files or vacation requests. HR software can take care of that for you because it is very easy to automate recurring tasks. Studies show that digital processes can make HR 20% to 30% more efficient.

Establishing a Sound Basis for Strategic Work

HR can only work strategically if the fundamentals are in place. HR staff have to establish processes in the company that enable them and all other employees to focus on their actual work and thus achieve maximum efficiency. And here HR departments can no longer avoid the introduction of digital processes.

Why? The demands of the market and of employees are increasing. A digitalized HR department demonstrably promotes employee satisfaction and makes companies more attractive. It really does make a difference whether you can apply for your vacation with just a few clicks, or whether you have to fill out documents, print them out and distribute them to various different people in the company.

If you want to work strategically, you need access to the right indicators, e.g. salary development, illness rates or staff turnover per quarter – which in turn are based on data. However, only digital tools can guarantee high-quality data because you regularly feed employee data into them and thus automatically update your database.

Be Bold and Consolidate Your Position

Once processes, structures, roles and the like have become entrenched, it is always difficult to break through them – but it is not impossible! The best approach is to change things step by step.

For example, use your weekly meeting with the CEO or managers to demonstrate your expertise. Explain your current challenges to them, e.g. slow hiring, data protection gaps or a high staff turnover rate, and what effect they will have on the future of the company. Propose specific initiatives to counteract this and, in doing so, consolidate your role as part of the management team.

It is also important to be visible and to proactively insist on a seat at the table. Make it clear to the executives that you want to participate in strategic meetings and be involved. Go directly to the management team to address specific issues: Why was decision x or y made and why does it make a lot/very little sense from an HR perspective? This is the only way you can really have a strategic influence on company decisions.

The Upshot: HR Needs a Seat at the Management Table

Your HR strategy needs to become a corporate process. It is not enough to define and push through individual HR initiatives. HR needs to be regularly involved in corporate strategy decisions. Because strategic HR means planning and acting for the long term and looking to the future. This is the only way to build a stable foundation for corporate success.

About Marina Buller

About Marina Buller

Marina is Content Marketing Manager at Personio and has dedicated herself entirely to HR and recruiting topics. After completing her master's degree in Lund, Sweden, she gained HR insights while working at XING. She now incorporates this experience into her texts - always following Personio's motto of "simplifying HR work".

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