How to Align HR Strategy with Business Strategy for the Future of Work

With talent shortages continuing in several sectors, many Canadian HR teams understand the challenges of bringing skilled employees on board to meet today's staffing needs. Exploring how to align your HR strategy with your business strategy is one way to help with current hiring decisions. It will also create a map for long-term hiring, training and retention that drives organizational growth. We look at why aligning HR and company goals can create a clear path to hiring for the future of work.

Why align HR strategy with company goals?

Along with helping to meet the current staffing needs of an organization, an HR strategy that is in sync with business objectives works to support long-term company goals.

HR often achieves this through recruitment or hiring strategies that proactively identify future talent needs or gaps, says Capterra, and have the flexibility to pivot as business goals change. By working in conjunction with business strategy, HR can also leverage data analytics to evaluate current employee skillsets and outline skills and training needed to meet future organizational goals.

Spurred by the COVID-19 pandemic, this collaboration is already taking place in many organizations, as the Society for Human Resource Management (SHRM) explains. With the crisis requiring HR leaders to focus on providing extra support to employees and working on more business strategies, HR's role has "fundamentally changed." 

As Naveen Bhateja, chief people officer and executive vice president of Medidata Solutions told SHRM's HR Magazine, “HR has cemented its position as the right hand of the CEO, helping navigate complex people-centric challenges."

Strategic hiring for the future of work

Integrating HR and broader organizational strategy is especially important as companies look to hire top talent, retain and equip existing employees with the skills required to thrive in a changing workplace. Here are two areas where closely aligned HR and business strategies help their workforce prepare for the future:

The data advantage

With companies grappling with increasing digital transformation and the continuation of trends highlighted during the COVID-19 pandemic, such as remote work, greater alignment of HR and business strategy can help firms leverage data to drive key training and hiring decisions.

When HR and business strategy are aligned, companies can carry out strategic hiring plans that take the future of work into account. As Gartner explains, HR leaders are well placed to offer insights to executives on organizational processes and future skills or roles the business will need. They can also inform leaders on how best to leverage different employment models.

For example, by accessing analytics from HR tools such as Human Resources Management Systems, HR professionals can track metrics and provide insights and forecasting based on workforce data, to help with organizational planning, notes McKinsey.

"HR's effectiveness and role as a strategic partner to organizations is stronger than ever," says William Howard, director of HR research and advisory services at McLean & Company. "HR practitioners are being relied on to direct decisions regarding critical business functions.”

Increased focus on individual and business goals

Strategic HR plans that are clearly communicated to your workforce can empower employees to make positive contributions to business goals. It can also give them direction when making decisions, says Gartner.

As McKinsey explains, nine out of 10 companies with effective performance management systems say that employees' goals are linked to business priorities. This encourages employees to be more effective as they see how individual goals fit into the larger, organizational picture.

It also provides a strategic focus to guide employee training initiatives, says Capterra in its article on strategic HR planning. For example, when HR is aware of an upcoming generational shift in leadership, it can proactively direct resources toward identifying and training future leaders.

How to align HR strategy with business strategy

To make sure HR strategy and business goals are working in harmony, with hiring and retention strategies geared towards long-term organizational success, consider the following steps:

• Delve deep into business goals: As Gartner notes in its article on HR strategy, one of the key steps in strategic workforce planning is to understand company strategy. Start by identifying strategic priorities, analyzing emerging trends and then translating these into workforce capability needs.

This process, says Randstad Canada, should involve a clear picture of both quantitative goals (i.e.: how many new employees the company is aiming to hire in a specific area) as well as qualitative plans (such as a goal to enhance digital training). This will help HR align its workforce planning strategy with organizational goals.

• Leverage data-driven insights: HR business partners, says McKinsey, can provide executive management with data-led insights to drive talent decisions, whether identifying skills gaps or core capabilities, to meet future business goals.

As Capterra explains, HR analytics dashboards can create reports populated with real-time data, to share with all business stakeholders.

• Embed HR planning in broader organizational planning: Ultimately, companies should consider workforce planning a permanent function, says Randstad Canada, entrenched in the business planning process. This will help HR teams stay up to date and adjust hiring strategies as company goals change and new talent needs or skills gaps emerge.

Aligning HR and business strategy can not only help organizations prepare for current talent needs, but by integrating HR as a key player within the business planning process, companies can make hiring decisions that are attuned to their changing needs. 

When HR develops a strong understanding of organizational priorities and analytics play an important role in informing future workplace needs, there is the potential to drive business goals – and a positive employee experience. By leveraging this partnership, companies can ensure leaders and teams are well-equipped with the talent and skills they need to thrive in the future of work.