How to Align HR with Business Strategy

How to Align HR with Business Strategy

By Patricia M. Trainor, J.D. 
Legal Editor

If HR managers learn to speak to upper management in terms of its strategic style, they will be heard and respected in their organizations. 

HR's Role

HR does not set the business strategy. In fact, according to Brady, HR is usually an afterthought when management discusses its business strategy. He finds this ironic since the number one concern of management is getting the right people--an HR function. Nonetheless, it is critical for HR to understand the business strategy and support it with appropriate policies and practices.

Strategic Style

Citing Competitive Strategy by Michael Porter; The Discipline of Market Leaders: Choose Your Customers, Narrow Your Focus, Dominate Your Market by Michael Treacy and Fred Wierseman; and The Talent Solution by Edward Grubman, Brady explained that a company's strategic style generally falls into one of three generic business strategies with implications for many levels of the company:

• Customers --In these organizations, the focus is on relationship building. Leaders are collaborative and emphasize shared values. Employees are hired if they are a good fit with the company's values and have the ability to develop relationships. Compensation is often based on results. Examples of Customer organizations include Nordstroms and IBM.
• Operations --In these organizations, the focus is on consistent application, process control, teamwork, attention to detail, and a drive for results. Leaders of these organizations tend to be charismatic, and employees are results-oriented and team players. Compensation is usually based on formula driven incentives. Examples of Operations organizations include Wal-Mart and Dell.
• Products --The focus in these organizations is on ideas and constant innovation. People in these organizations tend to be curious, creative, life-long learners, artistic, and visionary. Leaders are usually low-key visionaries. Employees are selected based on their intelligence and their commitment to long-term employment at the organization. Compensation tends to have a long-term focus and less emphasis on individual differentiation than other strategic styles. Examples of Products companies include Nike, Apple, and Bloomingdale's.

To figure out an organization's business strategy or style, Brady suggested looking at the organizations history and culture. Consider what “big events” drove growth, what worked and didn't work, what management says about strategy, and what the company culture emphasizes, i.e. , customers, processes, or autonomy.

Why is It Important

Understanding an organization's business strategy is important because people need to fit the strategy; one size does not fit all. Brady explained that an organization needs theright people, not just the best people, and it needs the right policies, not just the best .