Avenues for HR’s relationship with business strategy

There are numerous avenues through which HR professionals can significantly impact successful business strategy, writes Wayne Brockbank

Over the past 25 years, the Human Resource Competency Study carried out by the Ross School of Business at the University of Michigan and the RBL Group, has documented the emerging relationship between HR professionals and business strategy. The following eight points examine the avenues through which HR professionals might have direct and indirect influence on successful business strategies.

First, as process consultants, they can help facilitate the formulation of business strategy with the senior leadership team. They may do so by themselves, or they may assist in the selection and optimal utilisation of external consultants. And as members of the senior leadership team, they can contribute directly to the content of strategy discussions. This presumes that they have a vision for the future of the company based on their knowledge of marketplace realities and internal capabilities.

Third, as personal coaches to the CEO and other senior executives, they can help C-suite executives think through issues that are important to the formulation and execution of business strategy.  This strategy role presumes that HR executives have built relationships of trust based on consistently delivering both tactical and strategic results. And as information architects, they can help identify important economic, demographic, geo-political and market information and ensure its utilisation in strategic decision making. This role presumes that HR professionals understand the emerging role of HR relative to information management as we have discussed in earlier contributions to Inside HR.

Fifth, as unity builders, they can ensure that management team members are fully involved and committed to strategy formulation processes and outcomes. They build on their personal credibility with each member of the management team to fulfil this role. Sixth, as capability builders, they ensure that each department has the technical skills and knowledge that are required to implement the defined strategy. This requires that HR professionals have in-depth understandings of the underlying technologies that are essential for the firm to win in the marketplace.

Seventh, as culture champions, they build powerful business-focused cultures that encourage employees to think and behave as a fundamental source of competitive advantage. As they design and deliver the competitive cultural behaviours, they address the question, “How do our people together need to think and behave differently in the future than they have in the past so that they achieve greater results in the future than they have in the past?”

And lastly, as HR tacticians, they ensure that the basic HR processes are in place that create and sustain the strategic direction and momentum of the workforce. This requires a significant level of discipline to ensure that all HR processes are designed, integrated and delivered to reinforce the most important strategies for business success.

The ROI of HR
When all of these avenues are in place and fully utilised, the impact of HR on business strategy can be quite remarkable. Several years ago, the HR leadership at BAE Systems sponsored a developmental intervention for its top 85 HR professionals in the above strategic HR activities. The impact of the HR department on business strategy was measured by an external auditing firm before the program began and then a year after the program. In the opinion of line executives at BAE Systems, HR’s influence on business decisions and strategy increased 120 per cent, and its ability to provide innovative business solutions increased 85 per cent. Conclusion – HR’s role in impacting business strategy is not merely an aspiration; it can be developed and delivered to impact business results.

6 action items for HR
Steps to contribute to business strategy formulation:

  1. Read and master 2–3 MBA-level textbooks on business strategy.
  2. Read and master several analysts’ reports, annual reports and major magazine and newspaper articles about your firm, your major customers and your major competitors.
  3. Become familiar with the dominant economic, geo-political and social trends that influence the behaviour of your customers, your competitors and your own firm.
  4. Based on all of the above, formulate the key questions that your firm needs to address to ensure continuing competitive performance in the marketplace.
  5. Fine tune your questions by visiting with key thought leaders in the firm, including some who are involved in strategy formulation.
  6. You now have the legitimacy and knowledge to fully contribute to strategy formulation discussions.