Strategic HR - What Is It?
How Strategic is HR in your Organisation?
Now before those that don’t have ‘Human Resources’, ‘Organisational Development’ or ‘People and Culture’ as part of their job title decide this short article is not for them, please think again. A successful Human Resource Management (HRM) function at any organisation is shared, put another way HRM is not the sole responsibility of a single person or unit within your organisation. If you manage or supervise people you have a role to play, if you are an executive manager you have a bigger role to play.
On to a point that may prove contentious, but nevertheless fundamental for any article like this, a definition of Human Resources (HR). My offered opinion is this:
“People organised into an efficient structure with a collective competency set and culture to meet the organisation’s objectives and values.”
The definition intends that:
- ‘People’ are not limited to employees but include contractors, volunteers, board members etc – any person who contributes.
- ‘Structure’ means the dynamic of group reporting and monitoring of relationships to deliver the objectives and values.
- ‘Collective’ emphasises the whole rather than the individual and the creation of synergistic relationships.
- “Competencies’ are derived from formal qualifications, experience and creativity.
- ‘Culture’ is the attitude and embraced value set to get the job done. The type and commitment to culture will depend on the nature of the organisation. Contrast people working for a big bank as opposed to seasonal fruit pickers.
- ‘Objectives and Values’ can have different aspects (such as financial, community, client and environmental) and can apply at different levels (such as strategic, organization-wide, project, product and process). Ideally they will be documented and measureable.
Play around with the definition for yourself. Using the old, but still true, adage attributed to Peter Drucker, it is important that your organisation defines how it will manage “their greatest asset, its people”.
Now that we have had a go at defining HR let’s move on to the difference between Operational and Strategic Human Resource Management (HRM).
Examples of operational HRM functions generally include:
- Recruitment and dismissal
- Remuneration and reward
- Legislation interpretation and compliance
- Policy development and maintenance
- Performance review
- Industrial relations
- Safety and employee well being
- Regular organisational communication
- Plus all the supporting administrative effort including data management that goes with the above[/INDENT]
Listing these as dot points is not to diminish their complexity and the skill sets to deliver them.
To be successful senior Operational HRM practitioners need to engage with employees and line managers using persuasive skills backed up with a knowledge base derived from experience. For those without a HR team to support them they will, from time to time, liaise with external experts.
There is no argument that operational HR functions are core to delivering successful organisational outcomes. So what is the difference between Operational and Strategic HRM?
Operational is focused on the short term, it addresses the immediate needs and at times can be reactionary. Whereas, Strategic HRM is focused on the timely positioning of an organisations human resources to meet opportunities and challenges of the long term. Ideally we would expect these future focused objectives to be documented in a strategic plan but not always, they might simply exist in a CEO’s mind.
A long term HR strategy is characterised by bringing together any number of HR operational functions. In a previous article (‘The Change Challenge’) I discussed how a cultural change program could be implemented as a long term HR Strategy, involving a range of HR functions. (also see 'Why Transformation Efforts Fail’ by John Kotter). Similarly a recruitment and retention strategy may involve multiple HR functions.
Most often, big ticket strategy change will involve a range of functional resource areas including HR but also areas such as finance and marketing, all coordinated to deliver a desired organisational objective.
For a large corporate example that has been in progress for years and is continuing, with a massive HR impact, consider Australia Post:
- A significant part of the workforce has been replaced by contractors and the trend is continuing.
- Many Post Offices are now franchises with an expanded retail flavour.
- Traditional postal services are more expensive whilst service standards have decreased. This has been marketed to the public as mission critical.
Strategic HRM will need to have a strong understanding of organisational direction, environment, capability and an informed voice at the senior executive table. As alluded to earlier, for most organisations this may mean that others with technical expertise outside the HR area will have to take on this role and dedicate some serious thinking to it.
What do you think?
Thanks for a post to make me think.
The important distinction made in the post that hasn’t occurred to me before is that Operational HR can often involve managers/staff coming to see me after things have gone wrong. Whereas in Strategic HR, whilst I can argue it shouldn’t be, I need to be really proactive to engage with senior managers so that I can make a contribution to the bigger picture issues.
Also, the importance of workforce analysis as a skill is becoming increasingly important for any HR practitioner who wants to become more strategic. The ability to understand key workforce data to be able to formulate effective strategies and essentially ‘tell leaders what they don’t already know’ is a key value add.