5 ways to align HR strategy with business strategy

It doesn’t really matter what your business strategy is. You could be a multi-million dollar organization trying to corner the market, or you could be a scrappy startup just trying to break in—if your HR strategy isn’t fully aligned to support your goals, you won’t be set up for success.

Of course, it wasn’t always this way. Not too long ago, most organizations considered it enough to focus on more external aspects of their business, such as their marketing or product development strategies. But, gradually, as individual employees have turned into the true differentiators of companies, human resources has become integral to achieving business goals.

Let’s look at why this came to be, as well as how you can make sure your HR strategy is in lockstep with your larger business strategy.

The importance of HR strategy

As little as a decade ago, a look at most HR departments would show you a field mostly concerned with administrative tasks, such as onboarding employees, maintaining records, and ensuring legal compliance. However, as the competition for employee talent has steadily increased, HR has taken on a much more strategic role. As a result, more organizations now recognize the clear line that connects HR strategy to their bottom line. 

For one, strategic HR management can help departments find and hire employees who have the right set of skills and experience not only for immediate needs, but also for broader business goals. A well-crafted HR strategy can even help position departments to be more attractive to potential hires later on, such as by encouraging them to proactively network, or by helping them improve and streamline their operations.

By integrating business and HR strategy, organizations will also have an easier time identifying and anticipating their workforce needs. In turn, this will help them avoid potential labor shortages before they become an issue. And, of course, once employees are brought on, a good HR strategy will continue to provide support to help keep employees fully aligned and engaged in the business, ensuring they continue to work effectively and enthusiastically toward the organization’s goals.

How to align HR strategy with business strategy

Shifting your HR department from more administrative tasks to strategic initiatives that support and advance the business is often a slow and incremental process. After all, because you’re reframing the focus of your HR responsibilities, this is as much a cultural shift as it is everything else. This makes it especially important to plan exactly how you want to align your HR strategy with the rest of the business.

Here are some tips on how to do this well:

1. Understand business goals.

Before anything gets done, HR leaders should have a comprehensive understanding of what the business wants to achieve. The best way to do this is to give HR leaders a seat at the executive table, where they can learn firsthand about the company’s vision, mission, and goals, both from an abstract level and from a practical perspective. This will help ensure that any HR strategies developed are designed to support where the organization wants to go, as well as what the organization needs to get there.

It’s also important for HR leaders to regularly engage with other departments to understand their specific needs and challenges. This will help them develop strategies that support the greater mission and vision while supporting individual team goals. Keep even your smallest teams in mind, and you’ll create a more comprehensive and nuanced strategic approach that will help the entire business drive toward success.

2. Set clear expectations.

Once the business goals are well understood, the next step is to set clear expectations for both the HR department and its employees. These expectations should identify how high-level business goals translate into specific and actionable HR initiatives. They should be clearly communicated to everyone in the department, as well as across the entire organization, so that the whole company is on the same page. 

HR can also work with other departments to set expectations for their employees that help them see the connection between their role and the company’s objectives. Once this is established, HR and department managers can collaborate to come up with clear performance metrics that are aligned with business goals. Doing this regularly will help ensure that everyone keeps contributing to the organization effectively.

3. Prioritize strategic workforce planning.

No matter how aligned HR is with the company, it won’t be able to meet its goals if the right people aren’t in place. By making strategic workforce planning a priority, HR can ensure that it has the people and skills it needs. This process involves analyzing the organization’s current workforce capabilities, then using these findings to forecast future needs and develop strategies to bridge any potential gaps. 

In addition to building out a proactive strategy for finding and recruiting new talent, this process can also be used for succession planning. This is especially important in industries with an aging workforce, where qualified individuals may not otherwise be available to step into crucial roles. By coming up with a plan ahead of time, HR can help ensure continuity, as well as keep the business focused on its priorities.

4. Encourage data-driven decision-making.

Using data to craft an HR strategy and make decisions can be an effective way of driving toward business goals. HR analytics, for instance, can provide insights into employee performance, engagement, turnover, and other critical metrics. HR leaders and their departments can then use this information to identify trends, measure the impact of specific initiatives, determine whether the company is on the right track, and make data-driven adjustments if it’s not.

This data is also useful for identifying skills gaps and training needs, optimizing recruitment processes, and enhancing employee retention strategies. For example, by analyzing turnover data, HR can pinpoint why employees quit and develop targeted interventions. Similarly, performance data can help identify high-potential employees who may be ready for leadership roles.

5. Protect the employee experience.

When aligning HR strategy and business strategy, HR leaders should be careful not to neglect the employee experience along the way. After all, building a positive employee experience is just as important to meeting business goals as anything else. That’s because happy employees are more productive, engaged, and likely to stick around the company for much longer.

So, what can HR do to improve the work experience for employees? HR leaders can begin by understanding employee needs and concerns—and that effort starts by regularly soliciting feedback. This will make it easier to offer meaningful improvements to areas like work-life balance, professional development opportunities, and more.

HR should also make concerted efforts to recognize employee contributions. The more valued your employees feel, the more likely they are to be engaged—and, in turn, the more likely they are to invest more discretionary effort to help the company succeed.

Use PI to align your HR strategy with your business goals.

HR can no longer stand idle on the sidelines. To ensure your organization is ready for the future, your HR efforts must be an integral part of your overall business strategy. Achieving this synergy starts with building a more strategic approach for HR—one that is fully aligned with your mission and goals. In doing so, you’ll foster a work environment where everyone plays a shared role in guiding the business toward success.

The Predictive Index platform helps you align HR with business by optimizing your most valuable asset: people. Use our software to design a talent strategy that galvanizes your people and furthers your business goals. Our platform helps you:

• Hire the right people using science-powered assessments.
• Solve employee conflict and develop stronger relationships.
• Build high-performing teams using behavioral data.
• Send engagement surveys and improve the employee experience.
• Lead effective meetings and ensure employees are on task.

Ready to take your HR strategy to the next level? Request a PI demo today.