Aligning HR with business strategy

The majority of HR organisations are behind the curve when it comes to addressing issues that are central to achieving the most important enterprise goals, a new report from the Hackett Group finds. These include aligning talent strategies to business needs, dealing with critical talent and skills shortages and implementing organisational change.

The 2017 HR Key Issues research highlighted that while some crucial development areas are being targeted for improvement this year, others, such as finding solutions to critical skills shortages, retention of key staff and strategy execution, are unlikely to receive the attention they need.

The full report, The CHRO Agenda: An Urgent Need to Close Large Gaps in Talent and Technology Capabilities, is based on responses from executives from more than 180 large companies in the US and overeseas.

Harry Osle, global HR advisory leader at the global business services and strategic consultancy group, deduced that HR organisations are simply too busy fire-fighting “to get out in front on strategic issues”. And if HR is ever going to deliver strategic value, it must change this reactive mindset, he warns.

Interestingly, the report also discusses HR’s role in digital transformation. Most respondents believe digital technologies will fundamentally change the performance and service delivery model of HR and also that new roles will be required and the talent and leadership needs of the business will be fundamentally altered.

But the report found that far fewer think they are prepared to deal with this: only 47 per cent claim to have a HR digital transformation strategy and, worryingly, little more than half (55 per cent) of those with such a strategy reckon it is aligned with the business.

Among the other key enterprise goals identified in the report that HR rated itself least able to support were: implementing organisational change more effectively; improving the development of agile executives who can lead effectively in a volatile business and organisational context; and supporting enterprise innovation initiatives.

The big question must by why, after two decades of seeking to become more strategically involved in their organisations, are HR departments still fire-fighting? Are the issues they are facing directly linked with shortcomings at the top tier? How much of it is due to senior leadership teams failing to put issues such as critical talent, new roles and the need for different styles of leadership centre stage?

It highlights the urgency for senior leadership teams to work closely with HR not only to communicate the strategic priorities of the business but also to discuss in detail what impact these will have on key areas such as talent and skills. Prioritising these requirements will then help to form a roadmap of short-, medium- and long-term activity for the function which will enable it to better service and deliver on the needs of the business.

As Osle points out: “To build a real leadership position in the organisation, it is essential that HR find ways to more effectively manage and prioritise its service portfolio, adopt proactive demand management techniques from IT and make headway on transformation and improvements in key talent areas.”

Ultimately, it all boils down to the strategic alignment of organisational goals, a topic which I have previously blogged on and one close to Rialto’s heart. What are the capabilities the organisation needs to execute its plans going forward? This isn’t something that the HR function alone can be tasked with. It demands the involvement of the top team and all function heads. Collectively, they must take responsibility for the current and future needs of the business and their departments when it comes to key enterprise goals and effectively communicate this to HR to translate it into strategy.

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