Linking HR and Strategy

It is important to understand the activities in which HR engages in terms of their strategic value. One way of classifying these activities is shown in the diagram below. Transactional activities although necessary are often low in their strategic value. Traditional activities are the nuts and bolts of HR and have moderate strategic value, since they form the practices and systems to ensure execution of strategy. Transformational activities create long-term capability and adaptability for the firm and subsequently comprise the greatest strategic value for a business.

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It can be seen from above that most HR functions spend the vast majority of their time on transactional and traditional activities. HR4SMEs helps you to get the basics right so you gain credibility. Once you have the basics right you can then look to understand what drives the performance of the business.

HR4SMEs will help develop a people strategy by assessing the effectiveness of your HR function, developing an HR plan to link people to the strategy of the business to improve efficiency and effectiveness as depicted in the diagram below.

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The Reality of the HR Crisis

Organisations are under threat due to the increasingly complex labour market and the volatility of global economies. The unpredictable trends of skills shortages, redundancies, employee expectations, demographic shifts and industrial relations changes have all contributed to the lack of confidence in the reliability of labour.

The reality is that people management has become reactive and dependent on the individual skill of human resource practioners (and managers) as to organisational capability. What was once a vague business management principle, the art of managing employees, has now become an essential capability of business leaders in ensuring sustainability and growth of organisations. Labour is on average one of the largest costs to organisations. Businesses report that the cost of labour is escalating due to employee expectations for pay increases, compounded by the higher education and increasing skill level of employees and their growing levels of personal debt as well as increased competition between employers for talent. To be succesful an organisation needs to ensure that HR forms part of their overall busines strategy.

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