FlashPoint president Krista Skidmore presented a session on strategic HR at the 15th Annual Indiana Human Resources Conference on September 2, 2009. The following article summarizes some of the key points she made.

Human resources play a vital role in the life of an organization. Most companies invest significantly in employees, and success depends in great part on how well company leaders incorporate HR into their long-term plans. It’s not enough to merely manage day-to-day HR operations well; organizations must look at HR more broadly and link it to their overall strategy. This includes recruiting for targeted employee behaviors, measuring performance based on those behaviors, and rewarding employees who demonstrate the behaviors and help the company achieve its goals.

If you’re responsible for the human resources function at your organization, here are some steps/actions you must take to begin connecting talent acquisition and management to your company’s strategy:

1. Articulate in a compelling way the company’s mission, vision, and values.

The mission concisely states the reason for the company’s existence, and the vision defines its “picture of the future” or what success will look like. The values are the beliefs on which the company is built; employees should demonstrate them as they carry out the work of the organization.

It’s important that HR leaders know and understand the mission, vision, and values because these are fundamental guiding principles for the organization. The company should develop its strategy around them, and accordingly, HR leaders should use them as building blocks for HR programs. HR leaders must be able to communicate the mission, vision, and values to managers and employees throughout the company so everyone understands their importance.

2. Know and understand your company’s strategic plan.

If you don’t know where your organization is headed strategically, how are you going to help drive it where it needs to go? You’re not. And if you, as HR leader, are directionless, how will your company’s managers and employees know where to go? They won’t.

You need to be very familiar with your company’s strategy, therefore, and know what plans are in place to achieve it. Have open conversations with your company’s executives about strategy and learn all you can about where they want to take the organization. Ideally, they will have developed a strategy map, which will spell out steps the organization will take to implement strategy in areas such as finances, customer service, internal processes, and learning and growth. If they don’t have a map, explore with them how you might help build one.

3. Set HR strategies to support the company’s strategies.

Once you know and understand the company’s strategy, you should build your own HR strategy map and connect it to the company’s strategy map. Ask yourself what the human resources function must do to achieve the company’s goals.

In essence, you’ll take the company’s strategic goals and cascade them down to the HR function’s level. For example, perhaps one of the company’s strategies is to “continually improve effectiveness and quality.” As HR leader, you should focus on what your department can do to help achieve that strategy. In this case, perhaps you’ll “drive a performance culture by ensuring regular performance feedback and evaluation.” You might also determine to “attract and hire the best people for the right positions.”

4. Build your own competencies and tie them to talent acquisition, talent management, and total rewards.

The last step is to take this down to the manager and employee level by building competencies around the company’s strategic plans (and also its values). Competencies are the skills and knowledge employees must have to be successful at the organization. They set priorities for management and staff by defining standards for interacting with others (including colleagues and customers).

Let’s look again at the sample strategy in the step above—the goal to “continually improve effectiveness and quality.” Considering this, you might determine that one of your competencies is “Execution.” To further develop the idea, you can then build a list of associated behaviors (“Accomplishes priorities and achieves goals with determination,” “plans ahead, prioritizes, schedules, and monitors workloads effectively,” etc.). Now you have very clearly defined actions and expectations around which you can construct your HR tools. From here, you should incorporate the competencies into:

• Your talent acquisition program. Create behavior-based interview guides that focus on the competencies and prioritize hiring based on strategic needs. When you do this, you will ensure that the employees you hire have the skills you need to achieve your strategic goals and that they are a strong cultural fit.
• Your talent management program. Develop performance review forms that rate employees on how well they demonstrate the competencies you have established. This helps hold employees accountable, provides a forum for the manager and employee to explore improvements, and ultimately helps the employee understand how his or her work impacts the organization.
• Your total rewards program. Ensure a competitive base pay and then link incentives, such as merit increases and bonuses, to performance. The goal here is to reward those employees who demonstrate the competencies and help the company achieve its goals. To be even more effective, identify which positions have the most direct influence on strategy execution and funnel rewards to those positions first.

To maintain the strategic connections you have built, you must continually engage your employees. Studies find that 60 percent of workers have no idea how their jobs or the actions they take impact the organization and help it achieve its strategic initiatives. Developing competencies and building interview guides, performance reviews, and rewards programs around them is a good start, but you must regularly communicate with employees so they understand how these tools tie to strategy. Once they see the big picture, they’ll be more likely to participate fully, and you’ll be more successful in your attempts to connect talent management and performance to strategy.

To learn more about how FlashPoint can help you connect recruitment, performance management, and compensation to your organization’s strategic plan, contact us.