Best Practices in HR
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  March 14, 2020

Five Ways to Develop HR into a Strategic Business Partner

Look at any HR discussion forum, and you’ll find some version of this question: How can HR get a “seat at the table” and become a strategic business partner? For two decades we have heard about the need for HR to become a strategic partner to the business. The fact is, it still hasn’t happened.

The need to align HR with business has become more urgent than ever.

  • Financial markets exert relentless pressure for growth, especially in emerging markets.
  • Customers demand more and better service at lower cost.
  • Cost-efficiency, resource conservation and regulatory compliance have become issues for every organization.
  • Turnover among top talent is expected to increase in 2017.
  • Globalization is requiring stronger regional HR capabilities.
  • Demographic shifts across the world are affecting availability of qualified people.

Even though human capital issues are at the forefront of CEOs around the world, their regard for HR departments is low. In a Price Waterhouse Cooper study, only 34% said that HR is well prepared to capitalize on transformational trends (compared with 56% for finance).

In its “State of Human Capital” report, McKinsey found that people in HR still largely have “a support-function mindset, a low tolerance for risk, and a limited sense of strategic ‘authorship’” — all of which has led to “low status among executive peers, no budget for innovation, and a ‘zero-defects’ mentality.”

All too often, business leaders wonder aloud why their organizations even have HR departments. Some companies are outsourcing HR functions to outside agencies. In other cases, HR responsibilities are being returned to individual departments (see Harvard Business Review, “It’s Not HR’s Job to Be Strategic,” by Sean Graber, October, 2014).

Unless HR professionals step up to the plate as valuable members of the executive team, they risk becoming redundant.

For their part, many HR leaders are willing to partner with the business, but given the unique situation of each company, they have little in the way of concrete guidance about how to fulfill that role.

Here at Turnkey Coaching Solutions, we are familiar with these problems because our clients have experienced them in various ways. Here are some suggested tactics to ensure your HR professionals remain relevant and involved in executive strategic planning.

1. Expect a Seat

HR professionals who want a seat at the table have to earn that seat by thinking, acting, and behaving strategically. Those HR professionals who are naturally strategic have an automatic seat because they don’t ask for the seat. They show  up with a strategic mindset and assume the seat.

To demonstrate this, however, most HR professionals will need to develop their strategic capacity. By this is meant that they must understand that every decision about people and human capital assets impacts the bottom line, and furthermore, they understand how it impacts the bottom line.

Without connecting the dots to business results, HR strategies―no matter how well conceived and intentioned―will not resonate with others on the executive team. As is so often the case, HR proposals can be perceived as unessential to business success and even worse, a distraction.

To get a seat at the table, HR must demonstrate they belong there. They must acquire strategic thinking skills and speak the language of business.

2. Learn to Make a Business Case

In every executive strategy meeting, decisions are made according to impact on business results.

  • Operations has to make a business case for new equipment.
  • Marketing has to make a business case for an increased budget.
  • Mergers and Acquisitions need to justify purchasing a company.

While sometimes HR has to make a business case, far too often the project starts without proper evaluation. It’s an HR executive’s responsibility to properly strategize the solution before pulling the trigger. There is a need to ask:

  • Is the goal well-defined?
  • What is the expected outcome?
  • How does the initiative align with the company strategic objectives?
  • What are the barriers involved?
  • What are the market factors or influencers?

For example, if the company is evaluating a new benefits provider, the first questions are: will it save us money, make us money, attract employees or repel them? What’s the evidence that this makes good business sense?

Learn to create a business case and present the evidence clearly.

 3. Make Other Department’s Goals Your Business

If Sales and Marketing is not hitting their goals, the strategic HR professional doesn’t wait for them to ask for help or training, they show up at the door asking, “What can HR do to help you meet your numbers?”

A strategic HR person looks at every initiative in the HR department and asks, where are our facts? Where are the data supporting this initiative? How exactly will we measure success – both in performance and dollars?

The formulas are out there and those who are accustomed to thinking strategically, know how to talk in numbers.

4. Champion Performance Management

Many HR professionals assume performance management is a given, a task attended to automatically by managers as part of their job competencies. HR professionals champion, spearhead, train, coach and insist in effective performance management by managers.

But, is this the reality? Do your managers know their direct reports’ KPI’s? Do they know how to give effective feedback? Do they follow-through with accountability performance conversations (not just the dreaded annual review)? Are they well-trained in the art of coaching for performance?

Everything a HR professional does needs to be backed up by data and data is always available with a good Performance Management system. The strategic HR professional excels at reading the data, interpreting it, reporting on it, and making recommendations for adjustments.

They connect the dots from performance management data to business performance company-wide. They don’t assume that because they have a Performance Management system in place, it is being well-implemented. They address the ultimate goals of how the system is contributing to business success.

It’s not enough to champion performance, but also necessary to monitor it and report on where it succeeds and where it needs improvement. How is it being applied to issues of motivation and engagement? Are engagement numbers staying the same?

The strategic HR professional can address performance issues with data and reality.

 5. Develop Your Critical Thinking Skills

One of the best ways HR can demonstrate their strategic relevance is to develop a team of strategic thinkers. The strategic HR professional acquires critical thinking skills needed to analyze data, observe and discern key performance factors, and creates and manages systems that smooth the way for better performance leading to business results.

HR people need to be able to walk, talk, live and breathe critical thinking. They demonstrate their ability to analyze and coach others on how to align with the company’s mission. This  means teaching others how to align tasks and goals with the overall strategic plan.

HR needs to know how to properly analyze goals, progress, actions, and departments against key performance metrics. They must model the behaviors they want to see in other departments.

Part skillset, part mindset, HR needs to see into that crystal ball, identify the uncertainties, evaluate possible outcomes and devise a plan to ensure the best outcome.

The Missing Mindset of Strategic HR

Most HR leaders find themselves occupied in a problem-solving role as employee reactionaries: “We need a new hire.” “We need disciplinary help.” “We have a problem employee.” “We need our managers to get training on the new compliance laws.”

Consequently, HR professionals are in the habit of reacting to direction instead of setting direction.

HR leaders often lack the mindset and guiding purpose necessary for creating strategy that adds value to the overall organizational success. This probably stems from traditional HR focus on people, compliance, and problems rather than having a business profitability mindset.

Companies that want to ensure future success will look to HR to furnish better succession plans, more effective methods of retaining employees, programs to improve employee engagement, and refined performance management and training processes.

HR departments won’t see improved budgets or more power and responsibilities until there’s a shift in HR mindset and a focus on HR strategy that aligns with business needs. If HR leaders want a seat at the executive table, they’ll need to focus on profitability, innovation, and adding value to all aspects of the organization.

Turnkey Coaching Solutions

What do you think? What’s happening in your organization? We’d love to help. You can call us at 281-469-4244 and ask how a free Organizational Development consultation might help your organization. We’d love to hear from you.