Businesses that operate as a collection of independent departments often struggle with cohesion and finding common ground but those with HR as a strategic partner become efficient, uninterruptible success stories. The role of strategic partners allows HR to be more involved in every aspect of the business model rather than just overseeing admin tasks. The benefits of having an HR strategic partner are multifold whether in consideration of attracting and retaining industry-leading talent or in determining the realistic future of the company. The shift goes beyond a job title and companies that want to learn how HR can become a strategic partner need to prepare for a shift in the ideology of the business as a whole.
According to Gartner, viewing HR as a strategic partner or a business partner (HRBP) boosts employee performance by 22 percent. It also improves employee retention by 24 percent, and revenues and profits by 7 percent and 9 percent respectively. Instead of leaving business leaders to work in decision-making echo chambers, treating HR as a strategic partner can allow the perception of the organization and industry to be factored in as well.
Benefits of Having HR as a Strategic Partner
HR as a strategic partner can mean many different things for an organization according to the area it invests the resources in. With the way trends and technology keep adapting, having strong control over the human resources invested in a company and planning for the long term can be just as crucial a decision as planning a new product launch or seeking a profitable business deal. In every decision that a company makes, whether financial or otherwise, there is room for HR to provide insight into what can be done differently. The benefits of having an HR strategic partner are multifold and getting a headstart on planning can mean fewer complications in the future. SBT reported that companies with a business plan are twice as likely to succeed and for the generation of a successful plan, the consideration of multiple data points is often necessary.
Talent Acquisition and Retention
HR as a strategic partner can consider the search for talent for the long-term aspirations of a company rather than a rushed job to fill up a position the moment someone quits. Retaining talent takes active planning, and when it is treated as an administrative task the results of recruitment are often unsatisfactory. According to Smart Recruiters, 87 percent of recruiting professionals state that talent acquisition has become a more strategic function over the past year.
Strategic HR can attract top talent, ensuring the organization has the right people in key positions. Strategic planning on this front can ensure that the company plans ahead for quality hiring, proactively looks at new roles they want to set up, carefully evaluates the existing human resources for relocation, and overall ensures there are no interruptions to the workflow even when an employee quits.
Circulating Business Goals throughout the Company
Many organizations leave employees and HR teams out of the business goals and lose out on any form of coordination with them and insight from them. Establishing HR as a strategic partner will require some investment of resources but it will also equip them to make more informed suggestions and decisions when necessary. It will also help the HR team ensure the entire organization works towards achieving the goals of the company instead of their individual short-term projects that are disconnected from each other.
Data-Driven Decision Making
Empowering HR as strategic partners can open up a whole new world of data-based analytics and insights that go beyond revenue. By looking into HR technology for HR metrics and insights for better workforce management, companies can plan ahead based on their workforce capabilities instead of over or underestimating what is possible. These data points can also conceptualize what the workforce thinks is right for the company, what markets they might be ready to enter, what clients are actually expecting from business deals, what internal changes are necessary before the company’s next big venture, etc. The HR team can be equipped to bring a new platter of insights to the table when properly equipped for it.
According to Becoming a People Company, while 83 percent of HR leaders are in agreement that people-centered decisions should be based on data and analytics, only 37 percent use data to address people management problems. There is an evident lag in data-driven decision-making that can be addressed with HR as a strategic partner in company decision-making.
Branding and Reputation
Strategic partners get a say in the reputation of the company and with the human capital that HR works with, they are bound to have invaluable inputs that can be channeled here. A company’s public reputation determines its customer base and clients and working with HR to develop an appealing image can be the tipping point towards success. Whether through employee feedback or the interpretation of public response, HR as a strategic partner is bound to bring in information.
According to Glassdoor, 86 percent of employees consider a company’s reviews and reputation before applying for a job. Even in terms of compensating the right talent, a Harvard Business Review reported that companies with poor reputations had to spend 10 percent more on salaries than companies with a good image. If a company wants to grow its reputation, both internally and externally, it needs to consider what HR has to say.
How Can HR Become a Strategic Partner?
The role of HR as a strategic partner goes beyond giving them a new job title. It requires active investments by the business and a seat at every decision-making table within the organization to ensure their insights can find their way into planning strategy. For this to happen, changes need to take place on both sides. HR professionals need to have a strong grasp of the business and industry that they work in, going beyond their existing knowledge of HR. For an HR professional in the software industry to provide strategic insights, their understanding of the software, and its applications, market value, and its competitors might be integral to an informed opinion.
In a similar sense, the company also needs to invest in getting them up to speed and then place a certain level of trust in their judgment while planning. They need to explore how they can help HR become a strategic partner by providing them with the resources they need.
Invest in Growing HR
When companies have a skeleton crew working the HR tasks and handling everything from conflict resolution to payroll tracking, there is very little energy that can be dedicated towards strategic planning. Small, overworked HR teams have a considerable number of basic responsibilities and will remain unable to add data collection and insight generation to their list of tasks. To prioritize the shift to HR as a strategic partner, companies might need to make an initial investment into growing their HR teams and bringing in senior officials who can set up the basic system for HR to get started with doing more.
Gartner reports that even when HR business partners are established, on average, they spend around 19 hours handling employee issues and another 16 on daily operations, leaving only about 9 hours for strategic planning. Again, assigning a team is insufficient for it to be productive and companies need to ensure there are enough individuals on the team to free up time for proactive strategic planning initiatives.
Investment in HR Technology
Another investment avenue is in HR technology. Automation is the future of every industry and human resources is no different. According to HR Executive, 89 percent of C-suite executives and 83 percent of HR leaders report that technology has improved their flexibility and responsiveness. These are only a small segment of what HR tech can do. HR tech can be used to simplify existing responsibilities instead of the endless stacks of paperwork they are often left to deal with, saving time as well as reducing the likelihood of errors. HR technology also provides a range of tools that can be employed to gather feedback continuously rather than annual data gathering which provides an incomplete picture of how things stand.
Various HR management tools are available on the market today and can be employed by companies for the benefit of the workforce and its reputation. Statista reports that the annual revenue of HR tech was around $62.6 billion in 2022 and is predicted to grow to $91.8 billion by 2026. The booming industry has a lot on offer.
Get Involved at Every Step
The role of HR as a strategic partner cannot be a last-stage practice where the HR professional provides insight just before a decision is made—their involvement needs to be continuous. HR teams need to be involved in conversations in every department so they understand the ups and downs of every situation and develop their strategies and inputs accordingly. They need to have regular conversations with employees, get feedback on the company’s business strategies and their impact, attend meetings, read company reports, and provide their insights at every stage of the planning process. This is how a company can hope to grow. Attending the training and conferences that other team members gain insight from can also be fruitful.
Seek Industry Insights
It can sound like a lot to get started with but to fully explore the benefits of having an HR strategic partner, the HR team needs to understand the industry standards. This is essential for an individual to grow their comprehension of what their internal business strategy is, and also cover why the strategy was selected in the first place. The development of strategic skills is useful and looking at case studies and competitor performance can help them develop a better grasp of the reasoning necessary to make strategic decisions.
Address the Barriers to HR Becoming a Strategic Partner
Just like any other major transformation, the switch to HR as a strategic partner will be packed with challenges and roadblocks that will hold up progress. HR teams might be resistant to growing their workload or investing such vast amounts of time in learning every aspect of the company’s business proceedings. Other departments might look at the HR presence as an intrusion and resist allowing them to oversee discussions and decisions. Senior employees might even see this as a waste of time and resources and resist change solely because of its unfamiliarity.
Businesses that want HR to become a strategic partner need to plan out their strategy carefully and implement it with care. They have to reassure employees and provide additional assistance to ensure that the integration happens smoothly. They also need to ensure these changes come with benefits and considerations for employees and be transparent in their communications with them.
The shift towards HR as a strategic partner is one that successful businesses have already adopted and with the endless potential for long-term benefits, it is imperative for every organization to do the same. The sooner a business starts the transition into growing its HR, the easier it will be to move and improve processes within the company. HR teams need to grow more comfortable with asking questions and businesses need to become better equipped for answering them.