How do you set organizational strategy?
An organizational strategy is a creation, implementation, and evaluation of decisions within an organization that enables it to achieve its long-term and short-term objectives.
Key strategic considerations of organization strategy
(1) What re-configurations, reach extensions and strategic relationships will be necessary to deliver the intended organizational strategy.
(2) What new skills and capabilities will be needed? How will procedures change relating to the new skills and capabilities?
(3) What will the new level of performance be? How will it be achieved?
(4) What changes to corporate culture will be needed?
(5) How will operational activities be integrated?
The most important phase of implementation is the formulation of the organizational strategy.
The human factor
Most of the organizations successful in strategy implementation consider the human resource factor as very important in making strategies happen. Consideration of human resources requires management thinks about communication needs. They must articulate strategies so those charged with developing the corresponding action steps fully understand the strategy to be implemented. In addition, the human resource function understands the effects each new strategy will have on their people needs.
HR activities that support organizational strategy
1. Recruitment and selection
The ability to attract and select human resource having the right knowledge, skills, and attitude is an important function of HR. If it is successful in this work, it will be providing support to organization strategy in a big way. Productivity, quality, and service are the most critical issues in any organization and any positive contribution of HR in these areas will be of paramount importance.
The organization should recruit and induct employees who are a good fit for the jobs. If so, this will result in a visible improvement in productivity. Improvements will show in planning, processes, supervision, techniques etc. leading to improvement in productivity. This, in turn, will directly affect the organization profitability. HR in such cases is adding value to the organization.
Similarly, HR through right hiring may add value to the organization. If customer satisfaction shows an upward trend. HR adds value when costs and errors show a downward trend.
2. Quality is one of the most critical issues for any organizational strategy
Improvement in quality positively affects a host of other areas. Improvement in quality leads to a reduction in production or service cost and, providing customer delight resulting in customer retention. Increase in sales follows thus improving market reputation leading to a reduction in marketing expenses which contributes towards improved profitability
It is, however, important to remember that to qualify as a value-adding activity, improvements must be shown to have happened in consequence of the activity started by human resource function. In this context, the most important thing is the availability of the correct data and the right interpretation. In every case right measuring tools have to be found and the reasons for improvements are to be correctly determined.
3. Performance appraisal and compensation
Performance Appraisal and Compensation are the most critical areas of HRM. Formulating a system which is fully aligned with organizational strategy, and implementing the same in an objective and transparent manner is essential. Not only will this make the system acceptable but also positively affects employee’s motivation. The system not only enunciates the organization’s expectations regarding employee’s performance. It also helps in employee training and development. Similarly, laying down a sound and fair compensation policy goes a long way in attracting, maintaining, developing and retaining good employees. HR can add, value by proper formulation and implementation of these important functions and thus support organization strategy.
4. Training and development
A learning organization is fast becoming a reality. In any organization, continuous learning means growth through learning events and experiences for individual employees as well as teams, and the organization as a whole. HR plays an important role in developing a culture of continuous learning. Identifying, training and development needs and arranging, training and development programs for employees is part of the whole learning process. A system which creates an environment conducive to learning through experience, coaching, mentoring, self-learning as well as through training and development is a must in the learning organization. HR which is the main organizer, director, and controller of learning. Learning must be applied to processes in order to bring about improvements. Once again, HR is successful in adding value to the organization.
The Role of HR Function In The Overall Success Of The Business
Human capital leverages all the areas of an organization. Therefore, the HR department needs to ensure the human asset is effectively aligned with the strategy determined by the organization. To capitalize on the leverage, organizations need to adopt a new perspective of HR.
HR systems must align with the organizational strategy. Employees must be strategically focused. Every element of the HR function, from hiring, compensation, training etc. needs to be developed in order to enlarge the human capital in the organization. When HR is strategic and involved with and/or linked to organizational performance, it plays an important role in the success of an organization. When HR interventions are strategically aligned, competitive advantage is more easily achieved.
Alignment between HR activities and organizational strategy
Alignment between HR activities and strategic planning can be formed by HR. HR must expand beyond the administrative function. It must focus more on how it can support the organization in strategic planning and implementation. By increasing the competencies of HR personnel, the department will increase its credibility and be integrated into a strategic role. For that purpose, measuring itself from a business perspective and by the value, it brings to an organization is the key to its elevation to the role of a strategic business partner. Once there is a clear understanding of how HR affects the bottom line from a business / and or strategic point of view. The role of the HR function in the overall success of the organization will become crystal clear.