How Strategic HR Benefits Your Business and Your Employees
Strategic HR is about so much more than managing paperwork or running processes. It’s about empowering your HR team to drive real impact using people data to shape business objectives and weaving HR initiatives directly into the fabric of company goals.
When your HR strategy aligns with broader business priorities, you create stronger, more resilient organizations. Talent acquisition, retention, and culture-building efforts all start pulling in the same direction, helping your company perform better while creating an environment where employees can thrive.
Key takeaways
- Strategic HR is essential to building and adapting company culture.
- Your organization’s success depends on strategic HR to tie broader goals to HR functions.
- Strategic HR management improves employee performance while attracting top talent.
- Implementing strategic HR starts with a plan, requires buy-in from leadership, and demands constant maintenance.
The business benefits of strategic HR
Shifting to strategic HR is a significant investment. Like any other investment, it promises significant returns. Here are some of the benefits your organization can get from making this change.
Improved employee performance and engagement
Your workforce is your organization’s primary resource, with employee performance and engagement being the primary metrics used to determine how well you’re utilizing it.
Employee performance is tied directly to progress towards broader organizational goals, and strategic HR allows your HR team to find opportunities for improving performance at scale.
On the employee engagement side, strategic HR allows the organization to offer growth opportunities systematically and keep people engaged throughout their careers. Strategic HR also makes reinforcing company culture throughout the organization a priority, helping improve employee engagement.
Attracting and retaining top talent
Attracting top talent is a priority for every organization. A strategic approach to HR means HR professionals distill organizational goals into necessary skills that inform hiring plans and practices. From there, HR teams can craft job descriptions that speak to the best talent in your field, properly recognize that talent in interviews, and make them offers they can’t refuse.
But that’s not all. Strategic HR is crucial to retaining that top talent once they join you, too. Top talent rarely joins an organization expecting to stay in the same role. They’ll either get the experience they need at your organization and leave for a more prestigious role elsewhere, or they’ll capitalize on growth opportunities within your company.
Your HR team can ensure your top talent has all the opportunities to grow and reach their potential.
Greater business agility
Your organization will run into challenges that stretch your most thought-out plans to their breaking points. Leaders in all departments know they need to build agility into everything they do. Here’s why strategic HR has a key role to play here:
- Strategic talent development: Adapting to change requires significant skill from your top talent, and the HR team is responsible for building the foundation for developing these skills (as well as hiring your talent in the first place).
- Leadership enablement: Strategic HR makes the HR team a key player in all leadership goals, and they bring one key element to these conversations. Data. That data, around employee performance, retention, and more, can be the key to driving strategies for change.
- Sourcing talent internally: Too often, organizations turn to hiring to fill potential skill gaps or find the talent they need to get through a period of change. Your HR team can help other leaders identify opportunities for sourcing internal talent by elevating top performers to new roles or finding skills you need internally.
Your HR team has the data and the birds-eye-view needed to foster agility throughout your organization, making it more resilient to change.
Cost savings and operational efficiency
The decisions your leaders make and how you use your resources have a massive impact on your organization’s success. Whether it’s cash, talent, or other assets, strategic HR is essential to helping your organization make the most of all its resources.
Strategic HR gives leadership the data they need to know they’re getting the most out of their dollar in everything they do, like employee training, retention, and recruiting efforts.
HR efforts are crucial for streamlining processes throughout the organization, driving efficiency, and reducing the cost of every project. Additionally, every HR effort that reduces turnover reduces recruitment costs.
Enhanced employee satisfaction and loyalty
It’s much easier to retain and train existing employees than to recruit new ones, and HR initiatives keep employees satisfied and loyal. Your HR team is at the frontline of managing any issues employees run into, fostering relationships between coworkers, improving how leadership relates to the rest of the workforce, and more.
Recognition and appreciation are the building blocks of employee loyalty, and HR leads the charge in making employees feel recognized and appreciated.
Building a company culture through strategic HR
Your company culture might have initially been based on your founder’s values, but HR is more involved in building and spreading company culture as your organization grows. Reinforcing desired behaviors in every training, keeping employees engaged with the organization’s mission, and routinely sharing company values through every channel all reinforce company culture.
It isn’t just about building and maintaining culture, though. Strategic HR keeps company culture aligned with business objectives, too. In too many organizations, culture is built in a silo, leading to clashes with organizational strategy, making employees feel like they’re being pulled in multiple directions at once. Strategic HR brings the two together.
Look at Pixar, which has a culture rooted in inclusivity, where everyone has a place in stoking the fires of creativity the studio is known for. Initiatives like professional training and development, creative workshops, volunteering opportunities, and commuter assistance all contribute to fostering this culture of belonging in ways that contribute to the company’s goal of pushing creativity further with every film.
Consider Spotify, which calls its employees a “band,” channeling the energy of the musicians its product caters to. With mental health support being a key part of their culture, they’ve made some of their employees mental health ambassadors, who volunteer a few hours a week to plan and drive mental health initiatives while being a resource for employees. That’s the kind of widespread initiative only possible with strategic HR, and it directly reinforces key aspects of Spotify’s company culture.
This doesn’t happen in a vacuum. By working closely with other leaders, HR can ensure company values are reflected in every policy.
Why having strategic HR initiatives is important
Building and sustaining a competitive advantage
There’s more than one way to give your organization a competitive advantage, but one stands above the rest: sustainable growth. An HR team working in a data-rich environment and sitting at the leadership table can contribute to important decisions, giving leaders what they need to achieve sustainable growth.
Additionally, your workforce is your main competitive advantage, and HR helps keep it that way. By maintaining employee satisfaction and improving engagement, HR ensures everyone is giving their best on every project.
HR as a strategic business partner
There was a time when HR focused on administrative duties, but this has shifted towards a more strategic role. HR leaders collaborate with leadership from other departments on broader organizational goals rather than being siloed away to handle employee matters. Strategic HR allows HR professionals to contribute to long-term business goals by providing workforce data, aligning HR initiatives with other strategies, and spotting potential challenges before they come up.
Aligning people strategy with business goals
People strategy shouldn’t happen in a silo, nor does it need to be purely reactive. With strategic HR, leaders work closely to ensure better alignment between HR initiatives and strategies throughout other departments. This approach reinforces culture and values in every initiative, ensures projects work to improve employee engagement rather than detracting from it, and more effectively matches people with the kind of work they’re best suited to.
Managing change and innovation
HR will find itself at the forefront of innovation in many organizations. One example? AI. HR teams are often among the first to deploy AI tools in their day-to-day operations to streamline data management and handle repetitive tasks. They’ll be considered leaders in this field and expected to lead the transformation towards reliance on AI.
But strategic HR has a hand in managing change overall, not just with technology. By keeping abreast of broader market trends and internal data, they’re best suited to guiding leadership in making stronger choices when reacting to evolving requirements.
Measuring success
Closely monitoring key performance indicators (KPIs) is crucial for determining a project’s effectiveness in any field. Strategic HR applies this to building a workforce that can crush any goal your organization sets.
HR professionals already measure important KPIs like employee engagement, retention, and productivity. When HR becomes a strategic partner instead of an administrative function, that data works to serve leaders in every department, helping them build stronger teams and drive towards important goals.
How to develop a strategic HR plan
Your HR strategy requires a significant investment, but making that investment doesn’t have to be complicated. Here’s a simple plan every organization can follow.
Assess organizational needs and goals
Know where you’re going before you start making your plan. What does strategic HR look like for your organization? What kind of role do you expect your HR leaders to play? These questions should start guiding you towards finding out what your organization needs from its HR team.
From there, start hammering out your goals. What are the metrics you’ll track to determine success? Employee engagement? A reduction in turnover? It’s best to begin with a few metrics rather than trying to improve every aspect of your people strategy at once.
Create key HR initiatives
Administrative HR is reactive, responding to the organization’s HR needs as they emerge. Strategic HR is proactive, meaning you need to figure out your initiatives on a rolling basis, usually at the beginning of a fiscal year or financial quarter. You can do this by taking the needs and goals you’ve already identified and brainstorming initiatives that could make a dent in them. Examples of these include:
- Talent development programs
- Leadership training
- Employee engagement strategies
- Performance management systems
Incorporate employee feedback
When implementing strategic HR initiatives, it’s easy to lose sight of who they’re meant to support: your employees. Building consistent feedback channels for employees is essential. One of the best ways to do this is by deploying an all-in-one performance management platform like 15Five, which automates surveys and similar data collection methods.
Implement your plan and monitor progress
Roll out your HR strategy steadily and consider using a pilot project—a small-scale test of your overall strategy, with only a department or two—before applying it to the entire organization. As you do, keep an eye on your success metrics and track how they change. If you notice a downward trend, review your strategy to see if you can isolate the elements creating this negative impact and roll them back.
From there, monitor progress overall to see how effective your strategy is.
Examples of successful HR strategies
Here are just a few examples of 15Five customers and the HR strategies they put in place:
- Accounting firm DHJJ used employee engagement data to redesign its performance review process to make it more skill-based.
- ReUp Education built a company culture of growth for its managers, leading their Manager Effectiveness Indicator to reach the 86th percentile.
- Core Medical Group deployed 15Five to upgrade from managing endless paper forms and emails, and saw improved engagement and performance in four of their teams.
Practicing strategic human resources in your organization
Here’s a quick cheat sheet you can use to make your HR department more strategi.
Day-to-day practices for HR leaders
The more strategic leaders can be in their day-to-day, the more this will impact operations throughout the organization. Here are just a few things leaders can do:
- Regular leadership training: Leaders need a growth mindset to succeed, and this also applies to their leadership skills.
- Data-driven decisions: Hunches and gut instincts might carry an organization through some challenges, but data is a more reliable ally.
- Open communication: Data is just one part of the equation. Getting consistent feedback from employees, managers, and other leaders is crucial for adjusting your strategy as you go.
Using technology and tools
The HR world offers technology that makes repetitive HR tasks easier and gives you the data you need to build a more robust strategy. A performance management platform like 15Five can help HR leaders work more effectively by:
- Centralizing your people data.
- Powering people analytics so you know more about your workforce.
- Automating review cycles.
- Assessing performance with contextual information like role, department, and demographics.
These advanced tools automate the administrative part of HR while empowering your strategic efforts.
Continuous learning and adaptation
Continuous learning isn’t just important for employees looking to improve their performance. HR leaders and their teams need to consistently improve the way they work, challenge their biases, and use data to inform every improvement they make. Being a strategic partner means being able to constantly demonstrate the value of your initiatives while charting a course for future improvements.
Strategic questions HR leaders should ask
Constant reflection is a crucial part of turning HR into a strategic function. Guide your reflections with the following questions:
- “How can we align our workforce strategy with business goals?”
- “What steps can we take to increase employee engagement and retention?”
- “How are we measuring the success of our HR initiatives?”
- “What are the emerging trends in workforce management that we should be preparing for?”
Strategic HR: The partner your business needs
Strategic HR makes HR leaders a key partner for the rest of your organization’s leadership, allowing them to tie HR initiatives to broader business goals. By driving employee engagement, attracting and retaining top talent, and contributing key data to other initiatives, the HR team can become a strategic partner in any organization.
This isn’t a one-time effort. HR’s role in broader strategy will only grow, and that will require constant attention and adaptation, based on data, market trends, and feedback from employees.
Need to re-evaluate the role of strategy in your HR processes? Start here:
