Using Strategic HR to Achieve Business Goals
According to a Gallup study from the end of 2023, only 33% of employees reported feeling engaged in their role. This is a worryingly low number. Engaged employees are the lifeblood of your company. They identify with your values and work toward the company's goals.
Your HR team actively contributes to employee satisfaction and retention by recruiting top talent and managing payroll and benefits. Strategic human resource management can optimize daily operations, increase productivity, and improve employee retention.
Our guide to strategic human resource management and its effective implementation will help you get started. From key metrics for your strategy to the most important aspects – read on to better understand strategic HR management and its benefits.
What is strategic human resource management?
Strategic human resource management means that a company's HR department supports its long-term business goals. It is not just about everyday administration or communication with employees. Rather, strategic HR management connects the role of the HR department, as we usually understand it, with the company's standards and practices. This is an important reason why you should work on developing a global HR strategy.
Effective strategic HR management ensures alignment between processes, goals, and daily HR management. The key takeaway? Strategic HR management directly contributes to business success on various levels.
Why is an HR strategy important?
Strategic human resource management is important because its implementation significantly contributes to the overall success of your company.
A solid HR strategy is the connecting link of a company and ensures that all departments communicate and collaborate effectively. This is achieved through employee evaluations and the setting of actions that employees need to take to increase their value to the company.
Ignoring or neglecting an HR strategy is not only impractical, but can even be harmful. Employee conflicts, lower productivity, staff turnover, and performance losses are just the tip of the iceberg when it comes to the consequences of an inadequate HR strategy.
But let's put the negative aspects aside. What advantages does strategic human resource management offer?
8 Benefits of Strategic Human Resource Management
Higher Job Satisfaction
An effective HR strategy can increase your employees' daily job satisfaction. eNPS scores have decreased by 9% in recent years, suggesting that strategic HR management focused on employee satisfaction is essential. Job satisfaction is not only beneficial for your employees – research from MIT suggests that health and well-being are key factors in whether people stay with a company or leave it.
Improved Work Culture
Company culture is the engine of your business, and a positive work environment significantly contributes to its success. It fosters employee engagement—a factor that should be of central importance to every HR professional.
Engaged employees are efficient, productive, and motivated. However, according to a Gallup study, only 33% of employees report feeling engaged at work. Therefore, there is a need for action in the USA. An effective strategic HR plan can solve some of these problems.
Higher customer satisfaction
Engaged employees provide better service because they identify with the company's goals, the products they support, and the company vision.
Gallup studies show that engaged employees increase customer loyalty by 10%. Employees who are supported by strong strategic HR management contribute to higher customer satisfaction.
Efficient Resource Allocation
Strategic personnel management leads to higher efficiency and improved resource allocation. Time and tasks are distributed to the teams according to needs and in a meaningful way, contributing to the overall corporate strategy.
Employee-Oriented Management
This approach enables a more motivating management of employees. They are informed about the strategic goal and their contribution to it, helping them feel connected to the company’s values. They recognize the impact of their work and the associated benefits.
Increased Productivity
Good strategic human resource management leads to increased productivity—a goal that every company strives for. Satisfied and engaged employees are naturally more productive because they support the company's values and the contribution of their work. A recent study by Gallup confirms this: companies with higher employee engagement saw an 18% increase in productivity (revenue).
Stronger Alignment with Corporate Goals
The values of your company have their purpose—they are the foundation of your actions. Strategic human resource management helps you align this vision with day-to-day operations and ensure that everything is directed toward the same goal. With strategic HR management and the values embraced by your team, the overarching goals and KPIs of your company can be more easily achieved.
Satisfied and engaged employees complete tasks and take pleasure in the results. But it's not just about business success: engaged employees are generally less stressed and have greater future prospects.
Stronger support from management
With an established strategy, management can align with the overarching company goals and has a clear basis for their work. This allows them to take on the important task of motivating employees and encouraging them to comply with new guidelines for you.
How to develop an HR strategy
Leaders want HR professionals who act as strategic business partners.
Strategic HR is most effective when it aligns HR activities with company-wide business goals. A solid HR strategy begins with a long-term analysis of your company and the overall economic environment and then applies the key insights to all areas of HR work.
Your strategic planning should, for example, answer the following questions:
- What do we spend our time on – and how can we optimize our processes?
- Do leaders trust us as a resource in difficult situations?
- Is our voice heard when management evaluates future business plans?
- How do we attract and retain the best talent that our company needs for its success?
Remember: The only constant in life is change, and this is especially true in the workplace. Strategic HR initiatives are usually long-term projects. However, that doesn't mean they are set in stone. You should regularly evaluate your strategy and adjust it flexibly to better align with the organization and external factors.
Here are five tips for HR professionals on how to earn respect in their company's strategic activities:
Refresh your business management skills.
Before you can get involved in developing an HR strategy, you need to understand how strategic companies operate. Familiarize yourself with your company's core competencies and the requirements that your HR team needs to meet. Your strategy should support the teams that deliver the services or products offered to secure a competitive advantage.
Executives rely on collaboration when developing their business strategies—and this is exactly where you can contribute your expertise.
Capture key HR metrics
Data has never been as important as it is today. We track everything, from our steps to our screen time to our project hours. Using data to stay on top of things and remain informed has long been second nature to us. Our current report shows that teams that use data effectively are ten times more likely to generate valuable insights for leadership.
Data is a central tool in human resources, and it is important to identify the relevant metrics that you want to track as part of your strategic HR goals.
The metrics you focus on should align with your objectives. For example, if you want to increase efficiency in your company and boost productivity, you should consider implementing a strategy that tracks the time spent on tasks and outcomes. In our comprehensive guide, we have identified 29 key HR metrics that you should keep an eye on to help you get started.
Combine business and HR metrics.
This allows you to assess whether the organization has the resources, personnel, and support to implement various strategies. HR managers who carry out this task regularly work far more strategically and effectively, as the recommendations from this analysis link the HR department with the company's overarching goals and strategy. This is the core of strategic human resource management.
Observe rules, laws, and regulations
You can provide strategic insights and collaborate with leaders in strategic areas, but do not forget your administrative duties and compliance with rules, laws, and regulations.
If the analyses and assessments you have worked so hard on are not under control, they remain unused and can become obstacles. To fully realize your potential in human resources, you need to continuously optimize basic administration while also providing strategic guidance.
Getting started in strategic human resource management
Recognizing the benefits of strategic human resource management is the first step. However, implementing your own HR strategy is not yet complete. There are numerous examples of strategic human resource management that can inspire you – but that is only part of the picture.
Remember: Before taking any action, you should take the time to reflect on your company values and consider how your strategy can align with them. Think about how your approaches can influence employee retention while also strengthening your business objectives.
The main goal is to implement an HR strategy that increases efficiency, boosts employee retention, and contributes to the company's success. This may seem complex at first, but you don't have to tackle this task alone – seek support from the HR experts at IceHrm.
Strategic Human Resource Management is crucial for transforming HR from a tactical support function into a vital strategic partner that drives business success and counters low global engagement rates. This strategic shift is fundamentally dependent on the ability to capture, analyze, and link HR data to organizational outcomes. IceHrm is the indispensable tool for executing SHRM because it provides a centralized platform for capturing the necessary key HR metrics (Strategy 4) in real-time. From tracking time spent on tasks to analyzing performance and turnover, IceHrm transforms raw data into valuable insights that HR professionals can combine with business metrics to inform strategic planning, align daily operations with company goals, and ultimately secure a competitive advantage through a motivated and highly efficient workforce.