When done correctly, strategic HR planning provides many direct and indirect benefits for a company. These include the encouragement of proactive (rather than reactive) behavior, explicit communication of company goals, stimulation of critical thinking and ongoing examination of assumptions, identification of gaps between the company’s current situation and its future vision, the encouragement of line managers’ participation in the strategic planning process, the identification of HR constraints and opportunities, and the creation of common bonds within the organization.
In developing an effective HR strategy, an organization faces several challenges.
These include putting in place a strategy that creates and maintains a competitive advantage for the company and reinforces the overall business strategy, avoiding excessive concentration on day-to-day problems, developing strategies suited to unique organizational features, coping with the environment in which the business operates, securing management commitment, translating the strategic plan into action, combining intended and emergent strategies, and accommodating change.
A firm’s strategic HR choices are the options available to it in designing its human resources systems. Firms must make strategic choices in many HR areas, including work flows, staffing, employee separations, performance appraisal, training and career development, compensation, employee rights, employee and labor relations, and international management.
Selecting HR Strategies to Increase Firm Performance
To be effective, HR strategies must fit with overall organizational strategies, the environment in which the firm is operating, unique organizational characteristics, and organizational capabilities. HR strategies should also be mutually consistent and reinforce one another.
The HR Department and Managers: An Important Partnership
Responsibility for the effective use of human resources lies primarily with managers. Hence, all managers are personnel managers. HR professionals’ role is to act as internal consultants or experts, assisting managers to do their jobs better.
Over the past three decades, the size of the typical HR department has increased considerably. This increase reflects both the growth and complexity of government regulations and a greater awareness that HR issues are important to the achievement of business objectives.