How to link HR strategy to business strategy

We’ve entered a new age of HR. One that requires a deeper understanding of business metrics, analysis and statistics – skills that some HR professionals might not be all too familiar with.

So, in this emerging world of numbers, how do HR leaders stand their ground and connect with their data-driven leaders?

We spoke to Jim Harrison, international consultant and strategic facilitator, who will be leading the course ‘Linking HR Strategy to Business Strategy’ in conjunction with Queen’s University IRC.

“One of the aspects that draws HR leaders to Queen’s University IRC, and in particular this course, is the need for relevancy. The number of levers that business leaders now have to pull, in order to have a successful organization, is expanding. A major one deals with how best to use their people. How do they train them? How do they ensure they have the best leadership in place? How do they invest in them? How do they ensure great succession planning?”

All of these are questions business leaders wrestle with on a continuous basis, Harrison told us. The challenge historically for HR professionals is, whilst they’re great at bringing the initiatives to the table, they struggle with proving the direct impact of them on the business. 

“In this day and age, every investment we make in any kind of resource is scrutinized down to the nth degree,” continued Harrison. “HR professionals who bring a new program to a team are in direct competition with the technology department, with marketing and with finance, to be able to show why the Board or the executive leadership team should be investing in their initiative.”

As Jim alluded, technology tends to get the first dollar – and the second and the third. HR leaders need to ask themselves why that is.

“A business runs on three pillars,” he told us. “How do I make more money – which is revenue. How do I spend less money to make that money – cost. And how do I manage the risk. Revenue, cost and risk support all business models, with risk underpinning the previous two.”

So, how does HR strategy link to business strategy – and which pillar does the people function fall into?

“HR impacts all three pillars, revenue, cost and risk. It’s all about helping executives manage the risk of having right talent trained properly in order to make sure they can hit their revenue targets and manage their costs. In this regard, I personally believe HR is the most important function in the whole organization. You can’t operate any other function successfully if you don’t have smart, well-trained and well recruited people in place.”

Having said that, Harrison explained that one of the biggest problems HR people wrestle with is not having grown up in a world of numbers. Businesses which are hitting targets, with huge revenues and great standing in their respective sectors, may well dismiss the idea of introducing a new HR initiative without quantifiable evidence of its need.

“And this is where HR leaders come up against a major problem,” he continued. “If you don’t understand how the dynamic between money and investments work in your company, then you’re essentially pitching something your leadership teams have no interest in hearing.

“You need to start speaking their language. Anything HR brings to the table has to connect directly with the results of the business. In order to do that, you have to understand the dynamic of what makes for a successful business and what makes for a successful leader.

An expression Harrison’s used for years is ‘numbers are the language of business’ – something which is even more relevant in today’s statistic-heavy Boardrooms.

“If you’re not thinking like that as an HR professional, then it’s extremely difficult to get traction from any program you’re suggesting or solution to a problem you offer. You must connect it directly to the business results.”

In other words – it’s time for HR to start getting friendly with the numbers. Only that way can you fully comprehend the risks you’re asking your leaders to make when you come to them with HR initiatives.

“When we’re talking about ‘Linking HR strategy to Business strategy’, we’re encouraging HR professionals to deeply understand the business and, by extension, the choices business leaders have to make to run a successful operation.