What do you mean by HR strategy why it is important for small business?

In any business, strategic planning is crucial to both its short and long-term success. When a plan is in place, management and employees have appropriate direction to aid in decision making and where time needs to be spent to reach the goals and initiatives the company desires to achieve.

HR is no different. When evaluating human resource’s place in business strategic planning, there are five areas that need to be considered:

1. Alignment with the Organization’s Vision and Values

Business leaders sometimes focus so much on strategic planning and day-to-day operations that they can lose sight of the core of the business – the vision and values. HR, as organization and talent experts, can “re-ground” business leaders in the vision around what the organization’s purpose is and the values that drive people’s motivations and behaviors. By HR facilitating discussions with the leadership team, it can refocus the organization on what’s important and reignite the vision and values.

HR can also play a powerful role by modeling organizational values in their own team’s behavior and actions, which can be especially helpful during the changes that a new strategy creates.

2. Culture

The best of strategies can be derailed by a dysfunctional culture. A great culture powerfully enables the right strategic vision and plan. Leaders must think carefully about how their organization’s culture aligns and support its strategy.

As the only function with an organization-wide view on employee’s performance and effectiveness, HR is ideally positioned to drive the right conversations about the current culture and how the culture may need to evolve to support the strategy. The most successful HR professionals help leaders and employees alike articulate the desired culture in specific, relatable examples and behaviors.

3. The People Component

While the organization’s financial goals are often front and center in a top-level strategy, in most businesses, the people and talent priorities are equally important. These may include attracting and retaining top talent, developing new core capabilities, or enhancing diversity and inclusion – all of which are driven or supported by HR in some way. HR can ensure that talent and people factors are addressed head-on in the organizational strategy.

The people and talent requirements of the organizational strategy are owned by business leaders and managers, but HR professionals can establish the people requirements and ensure that the organization is set up to successfully execute on those requirements. HR often has access to useful analytics and knowledge around the current and future talent strengths, weaknesses, opportunities and threats, and can bring these insights to early stages of strategic discussions.

4. Total Implementation

While the overall strategic objectives and major initiatives are critical, so are the cross-functional plans that support execution of the strategy. In fact, many organizations fail when they don’t have practical, tactical implementation plans that take into account the changes that must occur to align the organization around the strategy.

HR can be an important partner in determining what aspects of the organization will need to be addressed going forward, who will be impacted and how, and what actions will be required to ensure success.

5. Employee Engagement

HR is often able to tap into the opinions and feelings of employees across levels, business units, functions and geographies. Engaging employees around the strategy early-on is critical for capturing their hearts and minds in the long-term. With people engaged, the strategy moves from mere words on paper to a blueprint for success.

HR can help solicit employee feedback, ideas, reactions and suggestions about what the strategy should be and how it should be implemented. If there are major changes ahead – such as a restructuring or a new technology implementation – HR also can act as a “change architect:” creating and executing strategies and plans necessary to lead and communicate the change.

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When it comes to business strategy, the human capital strategy may not be the first one on an entrepreneur's list. Product strategy, marketing strategy and of course financial strategy all consume a leader's thoughts while HR strategy takes a back seat....until something bad happens.

I get why that happens, but it's a big mistake.

I am a firm believer that businesses need an HR strategy from the very beginning. Before the first hire. Before the product is launched. Before the website is built. It should be included in the business planning. There is going to come a point in every business where the HR strategy, or lack thereof, is going to make or break a company.

Mark my words. It happens.

When we talk about HR strategy, we aren't just talking compliance. Most businesses do think about the legal side of HR. They want to do what they have to do to be legal. Truly effective HR strategy goes beyond compliance.
Much further beyond.

If you are in the midst of creating an HR strategy, or if you do not have one and want to get started, here are three of the many things to consider that go far beyond the legal aspect of having employees.

Organizational Design, Structure and Culture:  Leaders spend a ton of time thinking about what they want to build externally. They think through their product or service and how they are going to build that out to the public. It is just as important to think about what you want to build internally. How will the organization be laid out from a management standpoint? Will it be a flat organization or have many layers of managers? At what point will you know when it's time to add leaders? What are you trying to build culturally? Is there a certain way you want leaders to lead and employees to behave? Is your environment an autonomous one or one that thrives on constant collaboration? If leaders do not think about culture and design ahead of time, one will develop organically which may not be how the leader intended it.

Business Objectives and People Strategy: In every business there are roles that directly impact the business objectives and roles that serve in support capacities. Workforce planning should start with business objectives in mind. Deciding what roles are going to be critical to growing the business and then determining what support those roles are going to need. This particular part of the strategy drives many others such as compensation and benefits and recruiting strategy. It is crucial to think about workforce planning in this way and build it out long term. How many and what roles are needed now and how many and what will be needed in upcoming months/years. This allows for more proactive recruiting and planning rather than reactive.

This area covers a lot of ground and branches off into so many parts. Nailing this down from the very beginning and creating a strategy will alleviate many headaches down the road.

Performance Management: One of the areas I see small businesses falter in the most is in the area of performance management. Leaders often do not consider how they want to handle poor performance or behavior until it occurs. A robust performance management strategy that includes training and development, clear procedures for poor performance and open and honest feedback will be one of the largest areas that drives company growth. Please note I'm not talking about performance reviews here as the two are often confused. I'm talking about a fully developed performance management process.
And by the way, I believe you need that from the minute you open your doors, even if you have no employees beyond yourself.

Determining up front the answers to these questions and more, will help drive HR strategy for the long term. It will set the framework for the employer brand and ensure that time is not wasted on programs that do not add value. It sets clear guidance for all leaders who will need to handle employee issues and it allows the company to get far ahead of the recruiting game.

Flying by the seat of your pants when it comes to HR strategy just means precious time needed later during company growth will be wasted. Wise leaders will get in front of this early and build a strategy that truly moves the business forward.

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