Human Resources Strategy and Change: Essentials of Human Resources Strategy
An HR strategy is essential to steer the qualitative and quantitative development of the workforce.
The HR strategy describes the overall plan on how a company creates for itself a competitive advantage in the area of people and their skills and behaviors, which more and more become the main differentiator in the global markets.
An HR strategy should be comprehensive and long-term oriented and have a clear connection to business success (“strategically aligned”).
The globalization of competition demands both highly efficient, cost-optimized HR procedures and higher quality of the workforce. HR has to balance both aspects by delivering base processes at the lowest possible cost and to align the development of people with business strategy.
A pure cost-optimizing HR strategy might be appropriate in economically difficult situation; as a long-term strategy, it will, however, lead to quality problems with the products and services. With an increasing focus of customers rather on quality than on quantity, this will eventually create a problem for the company.
Outsourcing of base processes should be considered as an option in order to focus on strategically important aspects of HR management.
HR departments have to sharpen their role and ensure that their focus is really in line with business needs and the needs of different groups (e.g., generations) among the workforce. HR has to build a bridge between both and not simply play the advocate of one side “against” the other.
While in companies with rather repetitive work the focus of HR strategy was rather efficiency (i.e., getting a defined result with ever-decreasing cost of labor), there is a global shift toward higher-level work due to a higher sophistication of products and services. This development drives a rather effectiveness-oriented approach (i.e., getting optimal results with a defined cost of labor). In an effectiveness-oriented HR strategy, the qualitative development of the workforce is key.
HR strategy has two aspects: One that refers to the HR department and its further development and the other to the workforce of the company as a whole.
As a major success factor for implementation, both the company-specific HR value drivers and HR Key Performance Indicator have to be selected and defined according to the needs and strategic direction of the company. Ideally this becomes part of an overall strategy map (e.g., “balanced scorecard”) of the company.