We’ve seen an increasing amount of content being published about how a shift to strategic HR is the future, and how HR professionals need to be more strategic partners within their businesses. Like most things, this is easier said than done. Although the call for this shift is loud and frequent, we’ve spoken to many HR departments who are unsure what this means at a practical level. They want to be more strategic, and they have the talent and capacity to do so, but the question is always, how?
Telling someone to change the way they think of their job without sharing how is the equivalent of telling a baseball player to hit a 90 MPH fastball before teaching them to swing a bat. Before something can be put into practice, actionable steps must be taken and information must be shared. We’ve written this article to act as a practical starting point in your journey to develop into a more strategic HR leader.
What is Strategic HR?
Sometimes the best place to start is with a definition. The word strategic gets thrown around a lot in business, but we often feel it’s used in ways that are non-obvious or don’t exactly match its true definition. Strategic means “relating to the identification of long-term or overall aims and interests and the means of achieving them.”
So in the context of a shift to strategic HR, we’re going to be looking to identify long-term goals or aspirations, and then come up with plans to achieve them.
When we put it in that light, the goal becomes a lot less intimidating. In fact, you can start today.
Why isn’t HR typically thought of as strategic?
This question is worth asking, because if HR were already strategic then there wouldn’t be anything further to discuss. So why hasn’t the human resources department traditionally been viewed as a strategic entity?
It mostly comes down to the day-to-day functions of the job. Historically, the majority of HR’s tasks have been administrative. There was paperwork to be signed, payroll to be run, benefits to be administered, and time clocks to be tracked. The amount of time needed to complete these critical tasks could easily consume all 40 hours of the workweek.
These tasks have certainly not disappeared, but the advent of HR software has played a critical role in reducing a lot of the time that a human resources professional would typically spend completing them. Now that HR leaders can spend less time on these administrative tasks, companies are calling for more time spent on strategic ones.
Do you need to be freed to do more strategic work?
5 Steps to Being a More Strategic HR Leader
So with that context, let’s dive into the five steps to guide your shift to a strategic HR leader:
- Schedule time to think strategically
- Understand the needs and challenges of your company
- Gather data and understand metrics
- Develop and implement plans
- Forecast into the future
Schedule time to think strategically.
We mentioned the administrative side of HR as something that’s traditionally held human resources leaders back from being strategic. In many cases, this is still the case. If you’re unable to break free of the tedious, detailed, administrative work that can so easily consume your time, it’ll be tough to make the shift to a strategic leader.
So what can be done to help reduce some of the time spent on administration?
First, if you don’t have a great HRIS (Human Resources Information System), you need to convince yourself, your boss, and whoever else might be involved in that decision to purchase one. A good HRIS will immediately lighten your workload. The purpose of HR software is to make your life easier, automate repetitive tasks, and give employees the ability to complete tasks of their own.
Next, you’ll need to become more disciplined with your time. Implementing an HRIS will certainly help, but it’s so easy to get distracted or caught up in different things if you haven’t specifically allotted time for strategic thinking on your calendar.
Unlike task-based work where you can simply execute one task after another on a to-do list, strategic work may not have clear parameters. Strategic work requires critical thinking, creative problem solving, and data-driven analysis. Although time for strategic thinking is the most important leadership behavior in an organization, it’s rarely given the time it deserves. It is hard to determine how long it will take because it’s often impossible to tell how quickly you will be able to develop a clear direction or initiative.
Because of this, we recommend setting aside a few hours every week to devote to strategic HR initiatives. We recommend that these hours come in large, uninterrupted blocks of time (i.e. you set aside Wednesday and Friday mornings from 8am-10am to think about strategy). You really need to give yourself time to think without distractions and without other commitments.
Understand the needs and challenges of your company.
Ok, so now that you’ve committed to set aside time for strategic thinking, you’ll want to make sure that you’re spending that time wisely. It’s vital that you have a clear understanding of what challenges are facing your company before diving into possible solutions. If you fail to understand the issues, you’ll fail in your shift to strategic HR.
Start by making a list of things you recognize as difficult or challenging for the company. These challenges can range from very obvious (like missing a quarterly revenue goal) to relatively unnoticed (like a slow but steady increase in employee turnover).
Next, spend some time talking with your colleagues about the challenges they’re facing. It’s likely that each department head will be dealing with their fair share of problems. Get an idea for what these are and start thinking about how their challenges might overlap with your responsibilities.
Finally, consider the company mission, objectives, goals, and performance indicators. At a high level, what is your organization trying to achieve? Where is it struggling? What objectives are not being met, and why?
Only after gathering this information will your strategic thinking be valuable. Developing great strategy is impossible without understanding the broader picture.
Gather data and understand metrics.
Once you feel like you’ve got a better understanding of the problems and challenges facing the business, it’s time to dive into the data to figure out what’s going on and where you might be able to help.
Of course, as an HR leader, gathering the data and understanding the intricacies of sales and marketing funnels won’t fall on your shoulders. However, a shortage of salespeople or a high turnover rate in the sales department are metrics you should be tracking.
Your first step is to get an idea of what’s currently being tracked and what isn’t.
A great place to start might be with your company’s hiring funnels. Ask yourself if you can answer the following questions:
- What’s our average time to hire?
- Are there departments that hire faster/slower than others?
- On average, how many applicants submit resumes for each job post?
- How many days does the average candidate wait before being contacted?
- Which sources (job boards, referrals, recruiters) produce the majority of hires?
- What percentage of candidates accept the job when it is offered?
If you can’t answer some or all of these questions, you might have an idea of where you can spend your time. Strategy can only be implemented when problems are understood, and problems are best understood when there is data to support them. If you don’t have the data, you likely won’t know the problem exists.
You might anecdotally realize that you’re not contacting job candidates fast enough, or that the Marketing department seems to hire slower than the rest, but until you’re tracking it and monitoring those metrics, you won’t really know.
Apply this thinking to every aspect of the business that you are responsible for. Track metrics on employee turnover, retention, onboarding processes, and company diversity. Track reports on PTO usage, employee compensation, common disciplinary actions, and employment types.
Depending on the problems or challenges facing your company, some of these might be more important to tackle more quickly than others. Do your best to think through what data would be helpful when considering organizational needs.
Do you need to be freed to do more strategic work?
Develop and Implement Plans
After identifying specific data, metrics, or reports that you believe can contribute to understanding a problem, you’ll want to use that information to develop and implement a plan to solve it.
This is the essence of strategic HR. When thought leaders refer to the shift in human resources from administrative to strategic, this is what they’re talking about. Your business not only needs you to understand the underlying causes of what’s going on, but it needs your help in developing a plan to solve the problem.
Plans can be developed in many areas of the company but will be most welcome in areas that have direct correlation with revenue. For example, your company may be experiencing unusually high turnover. Turnover is extremely costly for a business, and slowing the turnover rate can save enormous amounts of money. A strategic plan from HR on how to solve the problem will certainly get your CEO’s attention.
When presenting your plan, be sure to use the data and metrics that you’ve collected. This will provide legitimacy for your argument. Be confident in what you propose. It’s likely that you have an idea or a way to think about the problem that no one else has discovered.
When implementing a plan, you’ll likely need buy-in and cooperation with multiple stakeholders. For example, if there’s a problem with a certain department’s hiring process, you’ll likely need to work the department head on solving the problem. It’s critical that you help your colleagues see that your intent is not to simply point out weaknesses in their department, but rather to help them tackle challenges that will benefit the entire company.
Forecast Into the Future
A final step in your shift to strategic HR will be your ability to take what you learn and develop forecasts for the future. As you are more thorough in your data capture and more analytical in your thinking, you’ll likely find that there are many problems you’d like to solve. However, due to resource constraints, organizational readiness, or management differences, you likely won’t be able to take on everything at once. However, you will be able to formulate and sell a vision of the future.
Strategic HR leadership will work hand-in-hand with other company executives to both identify and anticipate future challenges and opportunities. This might include predicting how many salespeople to hire as you ramp up growth, how to fairly compensate the customer service team to slow down turnover, or how to harness the power of exit-survey data to modify company culture.
If you remember, at the beginning of this article “long-term” aims are at the very heart of strategy. By definition, strategic leaders will need to be able to look ahead and make forecasts for the future. By following and repeating steps 1-4, you’ll be prepared to accomplish this fifth step when called upon.
A real-life example
Marion is the head of a small HR team for a logistics company with around 200 employees. Just recently, Marion purchased and implemented HR software company-wide, and now has some time to think more strategically.
One issue that has continually plagued the company is that they always seem to be short on fulfillment staff. As a logistics company, fulfilling orders is critical to their success and their reputation, but because of this staffing issue, they have been slow to get orders out of their warehouse. The slow fulfillment has caused the company to lose multiple customers.
To solve this problem, Marion first needs to understand why they’re always short on fulfillment staff. She investigates by looking at the data and finds that despite receiving many applicants for open positions, they have two problems:
1) Time-to-hire is incredibly slow even though it’s a position that doesn’t require a lot of previous experience, and
2) Turnover rate is higher in fulfillment than in any other department of the company.
Equipped with this knowledge, Marion can make some decisions about how to solve the problem strategically. She first needs to find a way to shorten the hiring process. As she digs into the data further, she realizes that there are too many stages in the hiring funnel and that the hiring managers are not communicating with applicants in a timely manner.
To change this, she works with the fulfillment team to shorten the hiring process from five steps to three. Rather than going through multiple rounds of interviews, candidates will now need to submit a resume, pass a phone screen, and have a single in-person interview before being offered a job.
She also leverages technology found in her applicant tracking system to automate email messages to job seekers, so that communication is streamlined and interviews are scheduled quickly.
By doing these two things, Marion is able to reduce the time-to-hire by over 7 days, allowing the fulfillment team to fill holes in their department quickly.
The second issue Marion wants to tackle is a bit more complicated. The turnover rate in fulfillment centers is typically high, but lately, it’s been much higher than usual. To get a better understanding of why this might be she reviews exit surveys of former employees, and narrows in on the questions surrounding their reasons for leaving the job.
It turns out that many fulfillment employees felt that they were fairly paid and the working conditions were fair. However, Marion reads time and time again that the onboarding and training for the fulfillment employees were lackluster, and that employees felt like they did not know what they were doing. This led to many mistakes being made, which led to upset managers, which led to employees leaving at a faster rate.
To remedy the situation, Marion holds a meeting with the fulfillment managers and reviews the onboarding and training process. It becomes clear that not enough time was being spent training new workers on how to succeed in their job. Marion and the team develop a new process that includes an extra day of observation, three extra days of hands-on training, and a quiz that new employees must pass in order to earn a completion certificate.
Within three months, the turnover rate in the fulfillment center reached an all-time low. The new training was paying off, and fulfillment employees were comfortable and happy with their job.
Over the next year, the company began to see revenue growth as customer satisfaction soared. This growth meant that forecasts needed to be made for the next six months. Luckily, because Marion was tracking metrics like time-to-hire and turnover rate, it became relatively easy to predict how many employees they’d need to hire, and how soon they’d need to begin the hiring process. Marion’s forecasts proved accurate because they were based on sound data that was proven to get results.
The shift to strategic HR is happening. HR leaders are no longer seen as administrators. Although the profession may still largely be task-oriented, the strategic side of HR is becoming more and more critical to aspiring professionals. Being able to understand company challenges, track and monitor data, use the data to make decisions and implement plans, and then forecast for the future make up the foundation that future leaders will build on.