How Business Strategy and Hr Strategy Are or Should Be Linked Together

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Institute of Tourism and Hotel Management

Anna Morozova

Essay
How business strategy and HR strategy are or should be linked together?

Moscow, 2011

Departments are the entities organizations form to organize people, reporting relationships, and work in a way that best supports the accomplishment of the organization's goals. Departments are usually organized by functions such as human resources, marketing, administration, and sales. The forward thinking human resource department is devoted to providing effective policies, procedures, and people-friendly guidelines and support within companies. Additionally, the human resource function serves to make sure that the company mission, vision, values or guiding principles, the company metrics, and the factors that keep the company guided toward success are optimized. Of executives surveyed, 20% currently use the HR department as active and innovative business solution partners. 20% believe that the HR department should remain as administrative overhead and only perform transactional work. But, 60% of the executives are starting to expect the HR department to partner with others departments to improve the company’s core competencies and competitive advantages. Competitive pressure in a fast changing business world – pressures for sales, talent, and profits. Most CEO’s are held accountable for three general but powerful results: Increasing revenue, generating cash, and reducing costs. In order to focus on these three accountabilities, executives are discarding paradigms that no longer work as companies seek to stay in and grow their business. Many CEOs and CFOs are more interested in the payoff and are asking appropriate questions: What’s in it for the company? Where is the improvement in the revenue stream? How does this get us new customers and retain our current customers. Where is the proof of corporate performance enhancement metrics? Once they get solid answers to these questions from competent HR leaders, the CEOs are quick to change their thinking. To answer the payoff questions, recognize that a continual company-wide value chain analysis is critical to the success of any organization. Over the past decade, CEOs began demanding that their Human Resources departments deliver flawless functional work and become a knowledgeable partner with all other disciplines to advance the business plan of the company. Individual professional silos are breaking down. Disciplines such as finance, sales, marketing, operations, and HR no longer exist as stand-alone entities. They are inter-dependent with one another. Weakness of any one of the links inhibits other links from maximizing their efficiency and productivity. These three emerging concepts in the practice of HR bear examination: * What value does the HR department brings to the organization. Many HR teams lack a vision that includes their value to the organization. Do the HR department’s activities directly help the company achieve its broad business objectives? Are the HR team’s arguments for or against a business strategy credible to the other department heads at the decision making table? How are the HR department strategies that benefit the employees, the shareholders, the customers, and all other stakeholders in the organization, selected and implemented?

* What value does the HR department generate for the customer – the end user of the company’s product or service? Sales and quality are no longer restricted to the sales and quality assurance teams. The HR department doesn’t just hire a salesperson based upon a manager’s request. The end result of HR’s recruiting and hiring efforts is that the customer who interacts with the new sales person receives continuing world class service from the company. HR shares the quality of the new hire with the other departmental silos to insure that the company is, or becomes, the vendor of choice for that customer.

* The final of the three emerging concepts...
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