Intersections of HR and Business and Organizational Strategy

A generation ago, human resources (HR) departments were often viewed as corporate backwaters that didn’t play a role in senior management.

Today, HR has moved up to the C-suite. As part of the executive leadership team, the chief human resources officer (CHRO) often works with the CEO and the chief financial officer (CFO).

“It’s not HR learning about the strategic initiatives or the strategic plan,” says Jennifer Ewing, MA, SPHR, SHRM-SCP, Program Chair, Human Resources Management (MHR) and director of the online Master of Arts in Human Resources Management at Claremont Lincoln University. “It’s HR being part of developing that strategic plan.” (Note: Analysis for this article is primarily drawn from interviews with Ewing unless otherwise noted.)

Companies have recognized that finding, developing, and retaining key employees can make or break their business initiatives, she says. As a result, HR organizational strategy has become a crucial component of overall organizational strategy.

Department of “Yes”

HR used to be seen as the “no” department. It told other departments what they couldn’t do with their workers.

Now, it’s moved to being a “yes” department, Ewing elaborates: “You say, ‘You want to take these actions? How can I support you doing that?’”

A major reason is that traditional HR functions, such as employee recordkeeping, have largely been automated. That frees up HR directors to think strategically about how to move an organization toward its goals.

Another reason is the rise of data analytics. A CHRO analyzes payroll, geographic, demographic, and economic data to determine how a business can best meet its personnel needs.

Ewing offers several examples of ways in which HR can support organizational strategy. Compensation, training and development, and talent needs analysis can each contribute to successful execution.

Compensation Strategy

A key part of HR organizational strategy is developing a compensation philosophy. It covers what wages and benefits an organization wants to offer — which depends, strategically, on what kinds of employees it wants to attract and retain.

“Do we want to have our wages at the industry average, or do we want to have our wages exceed the industry average?” Ewing says.

A technology company might aim to exceed averages to draw top knowledge workers. A nonprofit, on the other hand, might choose to pay less due to restricted funding and rely on its sense of mission to attract dedicated people.

Benefits can be strategically managed too, especially when they go beyond insurance and retirement plans.

• Flexible working arrangements, such as hybrid work arrangements, can enhance work-life balance. “I hear employees say that being able to juggle demands from home, like being able to run and get your kids and throw laundry in the wash, allows you to move your life along a little bit easier,” she says.
• Aid in repaying student loans may appeal to younger workers who don’t have the money to contribute to a 401(k) account. When an employee repays a certain amount of debt, a company can offer to match it.

Training and Development

In tight labor markets, a company may not always be able to hire people with the skills it needs. Training and developing existing workers becomes an alternative way to meet labor requirements.

“Fifteen years ago, you could just say, ‘I need somebody who knows how to do X, Y, and Z,’” Ewing says. “Now, you’re more likely to be hiring someone you think is a good fit and can grow. That means you’re upskilling them.”

Besides on-the-job training, she encourages employers to reimburse tuition, books, and supplies for classes at nearby colleges. She notes, “It can save you money, as opposed to going out and trying to hire someone with the skills you’re looking for.”

Talent Needs Analysis

When designing a new organizational strategy, HR ensures that employees have the talent to handle it. “We can do a gap analysis to determine the difference between where we want to go and where our employees currently are, and how we can bridge that gap,” Ewing says.

She once worked for a company that was implementing a lean manufacturing initiative: analyzing data to make operations more efficient and reduce waste. She created a strategic plan for the specific skills each level of the organization would need to make the program work.

“It’s a process of determining what is needed,” she says. “Then, how are we going to communicate that? Are we going to train for it? What’s the timing? Who gets what information first? Finally, it’s coming back and assessing and making adjustments as needed.”

Education for HR Organizational Strategy

To act as full strategic partners, HR management students need to expand beyond hiring and compensation. They need a background in how businesses work, whether it’s manufacturing, technology, or services.

Ewing, for example, earned a bachelor’s degree in operations management before pursuing a master’s degree in human resource management (HRM). Customers were often surprised when she, as HR director, gave them a plant tour.

“I would tell them, ‘Every HR person should be able to give you a plant tour,’” she says.

Data analytics is another key part of strategic HR education. “HR needs to know numbers like costs, because that’s the language business speaks. When you’re saying what’s feasible or not feasible, you’re able to assess that because you’ve done the data analytics.”

For HR managers, the payoff of a broader business education is the ability to help steer a business. “I haven’t met a company yet that doesn’t have humans as employees,” Ewing says. “For me, it just comes down to talent. HR is the business partner to help the organization have the talent it needs to succeed.”

Explore a Career in Human Resource Management

As HR managers take on more strategic roles in organizations, they need a broader educational foundation. A program such as the online Master of Arts in Human Resources Management at Claremont Lincoln University can equip a student with a wide range of HR and business skills.

Courses include the strategic role of HR, training and development, HR analytics, and leading organizational development and change. Because the program is online, students have the flexibility to learn on their own schedules.

Find out how studying at CLU with experts like Ewing can prepare you to help businesses thrive as an HR manager.