Strategic human resource management might seem secondary to other priorities for an organization, but it has real ROI. Any companies that are committed to human resource management, especially in today’s business and socio-political climate, will find that it supports their efforts to reach their larger business objectives. Employers can no longer get by on minimal human resources departments. Today’s workforce expects an HR strategy that builds a strong, inclusive corporate culture, supports its employees, and uses strategies for finding and retaining the best talent. Strategic human resources can impact every part of the business, from its culture, to the productivity of its people, to its reputations with clients and customers, and beyond. Strategic human resource management is not just a nice-to-have– it can be the key to success for an organization. Below are 9 reasons that companies will find true ROI from investing in strategic HR.
1. Strategic HR can get your business in compliance
While being in compliance isn’t always at the top of the priorities list for a business, not reaching and maintaining compliance can have a very negative impact. Strategic human resources can help an organization stay on top of local, state, federal, and industry requirements. Especially because HR legislation and regulations are constantly changing (and also incredibly complicated), it can be risky to assign this task to any employee in the company who isn’t fully focused on strategic human resource management. Being out of compliance, whether willfully or merely due to a lack of information, can result in huge fees, shut-downs or partial shut-downs, complaints, lawsuits, or damage to the reputation of the organization (either as a vendor or as an employer). Dodging these consequences could mean the difference between a thriving, competitive business or one that is in operation at all!
2. Strong HR strategies can help you become an employer of choice and attract the right people
With strategic human resource management, an organization can create and nurture an exemplary corporate culture. Companies that have great corporate culture find solid ROI and impact for a few reasons. Firstly, as a great place to work, they attract sought-after, experienced people who can add a lot to the business. Second, their employee retention rate is much higher. When a business can retain people, they will gradually learn more about the company, its unique needs and procedures, and they can grow within the organization. Employee retention also leads to a more engaged workforce that takes ownership for the larger business objectives and growth of the organization. The last benefit of becoming an employer of choice is that this can appeal to vendors, clients and customers. People like to work with and patronize companies where the average employee is happy and feel appreciated by their company. (Conversely, people tend to avoid building a business relationship with companies that are known to treat their workforce badly. Walmart is a good example of this phenomenon.)
3. Strategic HR helps you develop talent via training and planning
Every company knows that its most valuable assets are its people. With the right workforce, an organization can meet its strategic objectives, or even grow year-over-year. A business with a significant customer service component to its offerings will especially benefit from investing in its people. Strategic human resource management can assist companies with creating and planning the optimal training for every employee. With strategic planning, companies can provide their people with more than just the training they need to stay in compliance (like state-mandated sexual harassment training). An organization can also help an employee cross-train to cover people during an absence, gain new skills that could help for their current role, or prepare for expanded roles within management or with more responsibility. The best-case scenario is always when an organization can promote from within, tapping their existing staff and the deep knowledge they already possess about the business, its needs, and its goals.
4. HR strategy helps you create a hiring plan for growth
With strategic HR, companies can make a plan for the kinds of people they will need as the organization grows. Using long-term strategy, rather than just hiring reactively as needs crop up for the business, will help ensure that the best possible hires are made. An anticipated, strategic hire will be much better for the team. More of the right people can be involved in the hiring process, the best talent can be scouted for the role, and the employee with the best salary requirements for the company budget will be hired. It will also be easier to hire people who are a great fit for the team and add to the corporate culture.
5. Strategic human resource management assists in succession planning
Strategic human resource management provides tools (including software like MP’s Perform and Engage) for tracking the information needed to make strong decisions for an organization’s succession planning. It also offers strategies for analyzing that information, who to involve in the succession planning process, and how to implement it for the best impact on the business. Companies that use strategic succession planning are better prepared when people move on to new employers or if the company experiences a crisis like the pandemic, when turnover and absences are high. They’re also more likely to see the growth they want as they groom and promote employees to management so they can help guide the organization to new heights in its performance.
6. HR best practices nurture employee engagement and fight burnout
With strategic HR management, companies can protect its workforce against the devastating impact of burnout. When an organization doesn’t prioritize employee engagement, they are at risk. Workers who are disengaged or burnt out are significantly less productive, more likely to call out sick, and more likely to leave for new job opportunities. They’re also more likely to influence those around them, making burnout a contagious disease that can rip through companies, their productivity, their corporate culture, and their bottom lines.
7. Strategic HR can improve the performance review process
An organization with strategic human resource management can use time-tested strategy and cutting-edge software to make their performance review process more powerful. A more strategic process can help management can get a wider pool of feedback, support their employees in setting goals with a bigger impact on the company’s bottom line, and create more transparency and opportunities for growth. Employees are the most valuable resources of any organization. Using strategic HR to improve their performance review process can help a business realize explosive growth.
8. Human resource management can improve collaboration across teams and departments
Strategic HR can offer tools and best practices to encourage and facilitate collaboration across an entire organization. With the right software and strategy, employers can support their team’s ability to connect on more projects. The more collaboration across the business, the more knowledge and experience gets applied to problems, work products or services, enabling the organization to be more innovative. The impact of better collaboration can be felt in every facet of a business, from the smallest projects all the way to its bottom line.
9. Strategic planning can assist in embracing diversity in the workplace and hiring process
Hiring for diversity and embracing it in the workplace can seem deceptively easy and frivolous. However, in today’s business climate, an organization that uses strong human resources management to truly embrace diversity in its corporate culture and hire for it will see the impact in true ROI. Embracing diversity in the workplace isn’t just the right thing to do, it can help an organization in a number of ways. Firstly, employers that embrace diversity and inclusion will attract the best talent. Especially among younger generations, this can be a huge draw for candidates. Another way that it helps when human resources creates a more inclusive culture is that the organization sees more innovation and better problem-solving. With employees from different races, socio-economic backgrounds, ethnicities, gender expression and sexual orientations, gender, and more, an employer can bring the power of many perspectives and experience to their business. Innovation happens when employees can bring many different strategies to the table, which is more likely to happen with a diverse team. Lastly, businesses may find that when they use strategic human resource management to set goals for hiring and embracing diversity, they will also win the trust and dollars of consumers and clients. The world population is becoming more and more diverse over the years and many people want to see that reflected back to them in the vendors they work with and the companies they buy from. From a strategic HR standpoint, the company that creates a more inclusive culture is also opening itself up to feel more inviting, trustworthy, and admirable to today’s discerning and social justice-minded consumers.
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