Strategic HR focuses on the performance of each employee and how it affects the business as a whole. It can play a key role in advancing the goals and success of your organization. You can get a good idea of where your organization stands by answering the following types of questions:
- Do you need different knowledge, skills, and/or abilities from your workforce in order for the business to grow?
- Do you clearly convey the expectations and the business value of each person's role in the company's direction?
- Does Management address employee training and performance development well?
- Do you have established programs to recognize and reward performance?
- Do you consistently provide competitive market pay and benefits for the right sets of skills and competencies?
- Does your company further minimize risk by remaining compliant to employment laws?
- Do you know and monitor the key HR metrics that help you determine employee performance and guide decision-making?
The more no's or don't know's you answer, the greater efforts your company needs to improve. With strategic HR management, your goal is to ensure that the talent of all your employees line up with the company's business objectives. Accomplish this, and you're well on your way to much greater success.
HR metrics assign value to various aspects of employee performance. These metrics are useful for measuring an organization’s performance overall and for uncovering HR-related issues that can have a major impact on a company’s bottom line — for example, revenue per employee, benefits costs, and cost of employee turnover.
If any organization is interested in using HR metrics, the first step is determining what to measure. The Society for Human Resources Management (SHRM) advises organizations to select and define the data that aligns with their business strategy. From there, they will need to define a formula for each metric. For example, the formula for the turnover rate metric is:
Total separations/Average number of employees = turnover rate
What is some key data that is useful for businesses?
- General HR — May include revenue per employee, profitability, benefits costs, and employee counts (which can be important in determining which federal regulations and requirements apply to your client’s business).
- Compensation — May include metrics such as pay range and compra-ratio (an employee’s salary divided by the market rate for their role), which can help a business identify and mitigate potential turnover risks.
- Recruiting — These metrics focus on the costs of obtaining a new employee and could include advertising costs, agency fees, travel costs, and others. Tracking recruiting metrics can assist in determining the costs of hiring new employees versus retaining existing employees.
- Turnover — Turnover metrics deal with the flow of employees into and out of an organization over a specific period of time and the costs associated with the loss of employees through retirement, terminations, and resignations.
- Employee Engagement — Employee engagement metrics focus on the degree to which employees care about their jobs and are committed to the organization’s success. Such metrics are directly related to turnover, efficiency, and the business’s overall financial health.
The HR Trend Impacting Strategy
This is the first time in history that there are five generations at work together, and the business implications of such a diverse workforce working side by side cannot be overestimated.
Recently, 60 percent of CEOs surveyed by PricewaterhouseCoopers indicated that the multigenerational workforce will in fact “transform” business in the near future. For businesses prepared to manage an increasingly diverse workforce, this transformation can be productive — and profitable. As workforce demographics shift and your employee makeup becomes more varied and complex, a long-term human capital management (HCM) plan as part of your human resources strategy is more essential than ever.
This HR trend demands consideration. Think about it: By 2025, Millennials — those born between 1981 and 2000 — will account for 75 percent of the global workforce. Today, by comparison, Millennials represent only about 34 percent of the workforce. Organizations must be ready for big changes to come — changes that include how to attract, hire, incentivize, and retain employees, as well as how to measure and reward productivity, manage absence, and create a culture that resonates with this new generation of workers. Without a doubt, HR professionals will be key players in readying your organization for these seismic shifts within your greatest asset — your workforce.
HCM Solutions: A Key Part of HR Strategy
As organizations formulate their HR strategies, more and more employers are looking to make manual administrative tasks more precise, efficient, and seamless. Businesses considering automating HR processes, payroll, and time and labor tasks are increasingly turning to Human Capital Management (HCM) solutions to get the job done. As the workplace continues to shift to a more technologically-driven environment, businesses are finding that managing their workforce needs on a single cloud-based platform is not only a suggested practice but essential to their success.
Even for small and mid-sized businesses, dated manual HCM processes are clumsy and inadequate. Specific challenges around changing labor laws, the rise of a workforce that increasingly expects to work with technology over paper, and the growing emphasis on employee engagement require businesses of all sizes to think beyond manual processes.
With a single miscalculation potentially costing thousands of dollars in penalties and legal fees, businesses know that there’s no room for error as labor laws continue to become more stringent. FLSA and ACA changes demand HCM automation, allowing businesses to take a proactive approach in managing their labor law compliance strategies. Features such as robust reporting, management dashboards, and 24/7 access to real-time data allow businesses to maintain compliant and avoid potentially crippling consequences.
Tech vs. Paper
Businesses with outdated practices are finding it increasingly difficult to stay competitive as they’re incapable of attracting and retaining younger hires who are expecting a certain level of technological advancement in the workplace. Traditional business culture is also changing. Employee work schedules are becoming more flexible and the amount of remote employees is growing. With cloud-based HCM solutions, businesses can satisfy both types of employees.
By simply automating HCM, businesses can stay competitive in their market, grow workforce productivity, and improve their overall bottom line. Features such as self-service functionality from onboarding to offboarding gives employees insight into HCM processes and allows them to take charge of their own information, giving them increased decision making abilities such as scheduling preferences, benefits administration, etc. Some HCM solutions even allow employees to keep track of their performance reviews and job training.
HR Basics Training for Staff
Managers and organization leadership should be trained in the HR basics, but some may or may not apply depending upon the company’s size and industry. Below are some suggested strategic and compliance training topics to assist managers in increasing effectiveness and reducing exposure:
- Business Execution. Monitoring business goals, supervising employees, and managing organizational changes may result in improved business effectiveness.
- Leadership. Providing ample opportunities for employees to have open communication and share a common vision, mission and goal helps with decreasing employee turnover rates.
- Performance Management. Learning to provide evaluations that are fair, objective, and based on the organization’s goals opens the door to feedback and conveys to employees they are valuable assets to the organization.
- Diversity. Getting to know who your employees are, how to execute equal employment opportunities with non-discrimination tactics, and handling generational differences allows for increased employee satisfaction retention rates.
- Business Crises Management. Planning, analyzing and evaluating how to handle stressful, harmful, or safety-related hazards that occur intentionally or un-intentionally (such as violence, injuries, accidents, fires, earthquakes, etc.) enables managers to take action rationally and rely on the team when needed.
- HR Best Practices. Learning the basics about hiring, termination, harassment, business policies, employment laws, paperwork compliance, etc., sets forth better protection for managers and organizations. Often, the number and degree of EEOC complaints, OSHA violations, wage and hour penalties, or other claims are reduced when managers receive training on these topics to assist them in making informed decisions.
Smart Employment Strategies
These days, it is imperative to position your company as an employer of choice in the labor market. Employers and HR personnel should analyze their employment strategies and pursue strategies that can influence retention rates. Examples include:
- Creating positive, compelling images of the organization that convey social responsibility and industry impact.
- Providing clear and consistent messages about what it is like to work at the organization through viral phrases such as “commitment to innovation”,” teamwork”, etc.
- Encouraging the best potential candidates to apply for jobs with advertisements using traditional and social media.
- Decreasing the time-to-fill and cost-per-hire ratios.
- Lowering turnover by offering competitive packages and enjoyable work environment.
- Linking the employment brand with the company’s product brands by reinforcing the public’s image of the organization.
- Giving employees a sense of pride in their company by knowing they are working for an employer that has a competitive edge and/or positive contribution to society.
Performance Management Strategy
Here are some principles to keep in mind when determining your organization's performance management strategy:
- Performance reviews, however often they’re done, shouldn’t be a surprise. If you give employees regular feedback on their performance and address poor performance when it happens, then the review becomes more of a reminder and summary of what employees are doing well and where they have opportunities to improve.
- Conversations with an underperforming employee may be challenging, but allowing poor performance to continue unabated can cause widespread frustration and resentment from coworkers whose work is affected by it. Ignoring poor performance only compounds the problem.
- Employees are more likely to take ownership over their performance goals if they have a role in defining those goals.
- Connecting performance measures to company objectives and values can increase employees' sense of purpose and engagement by drawing a direct correlation between their individual work and performance and your collective success as a company.
- It’s helpful to structure performance evaluation meetings and conversations around the specific expectations set in the job description to ensure that the discussion is directly applicable to that employee's particular job duties.
- Documenting performance evaluations can help you justify pay increases, decreases, or other employment decisions like termination that could be challenged as discriminatory. It’s safest to terminate an employee when you have documentation that justifies the legitimate business reasons for the termination.
Human Resources Maintenance Tips
Every HR strategy should include a plan for periodic maintenance. Depending on the number of hours available, consider mixing and matching the following HR maintenance tips, from quickest to most comprehensive:
- Do a walk-through of the workplace to ensure that pathways are clear and free of tripping or falling hazards. This may mean finding storage for unused furniture, breaking down boxes, or finding a system to organize supplies.
- Set aside 30 to 90 minutes for employees to tidy up their work areas. Ask them to recycle or shred documents they no longer need, give their filing cabinet or desk drawers a once-over, clean up unruly cables, and wipe everything down.
- Take an inventory of things that need to be fixed and start tackling it from most to least important. This might include a broken lock on a bathroom door, dirty walls, carpet stains, broken office chairs, fraying uniforms, mismatched name tags, or malfunctioning computer equipment.
- Clean up personnel files. Often in the day-to-day rush, a document will just get stuffed into the middle of a file. Take time to go through and file documents in the right places, whether that’s a specific section of the file a document is already in or a different file entirely. A little maintenance on a regular basis can go a long way, especially if you receive an unexpected request for documentation, whether from a former employee, an attorney, or the state or federal Department of Labor.