In our recent survey of business leaders from the Charter research team, 64% of CEOs, CFOs, and their deputies—and 68% of HR leaders—agreed with the following statement: “We would be well served if our human resources leader operated more strategically.”
What does it mean to be a ‘strategic’ HR leader?
To help answer this question, we spoke with Mai Ton, Charter's CHRO in residence; Donald Knight, chief people officer at Greenhouse; and James Baron, professor of management at the Yale School of Management.
A strategic approach to HR means closely aligning your people strategy with your firm’s business strategy, explains Baron: “The research evidence that’s out there is pretty clear that firms that do have a more strategic approach to HR…do better.”
How do you achieve that alignment?
Ton and Knight recommend distilling your agenda into no more than three workforce outcomes that are essential for your firm’s business strategy to be viable. (Limiting yourself to a small number helps you stay focused on the highest priorities.) If the health of the business depends on creating larger profit margins, for example, HR might create a training program that focuses on how staff can achieve that.
Ideally, your target outcomes are based on regular conversations with your CEO about their own priorities, explains Ton. These check-ins serve a dual purpose: They help guarantee that your people strategy is on track to help drive the business strategy, and they communicate to your CEO that you’re pulling all the levers you can to support them.
Clearly communicate your target outcomes to your executive team, with regular updates about the progress you’ve made toward achieving them. The more transparent you can be about how you’re setting goals and measuring your team’s impact on the business, “the more credibility you earn as an HR leader” among the rest of your company’s leadership, says Ton.
You should also share a condensed version of these objectives and your progress with the entire company, Ton adds, which will “go a long way to making employees feel like part of the bigger plans.”
Consider an overhaul of your people analytics. According to a 2021 survey of HR professionals conducted by the HR Research Institute, while 34% of companies use descriptive HR analytics to a high or very high degree to interpret the past, only 15% do the same for predictive and prescriptive HR analytics to better understand the future. Some companies use these analyses to, among other things, predict employee turnover and decrease the number of job interviews required to hire the right candidate.
Knight and Baron also suggest making sure your team includes people with strong business-analytics capabilities, who can use this data to share a deeper understanding of how your HR strategy will influence the company’s bottom line.
How can you prioritize strategy?
When so much of your role is putting out fires and juggling immediate priorities, making room for longer-term thinking takes deliberate effort. “It's easy to talk about day-to-day because it's right in front of your face and you feel like it's the most urgent,” Ton says. Baron recommends creating a clear distinction between strategic roles and transactional roles within your HR team. “Somebody has to deal with problem employees, provide support to managers, and make sure that legal and company policy mandates are adhered to,” he says. But when someone is tasked with those transactional responsibilities and longer-term strategic planning, the former will take precedence because those concerns are more immediate and easier to address.
In practice, that sort of staff delineation could be challenging (and siloing strategy work may hinder the development of team members who aren’t a part of it). Instead, Ton says, be intentional about how different types of work are distributed throughout the team and the day: “It comes down to focus.” In building your own schedule and setting scheduling norms for your team, clearly define time dedicated to daily operations and time dedicated to long-term strategy, keeping in mind that the former should be linked to the latter.
Prioritize regular check-ins with your CEO to keep HR strategy aligned to overall business strategy.
Hire — or train — team members with strong analytics capabilities for a deeper understanding of how your HR strategy will influence the company’s bottom line.
Be intentional about carving out time for strategic work amid day-to-day tasks, and help your team do the same.
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