It's Not HR Strategy, It's Organizational Strategy

It's not about developing HR strategy, it's about developing a strategy that aligns HR with organizational strategy.
May 8 / Kristie White
As we think about strategy, it’s important to remember we are trying to align our Human Resources strategy with the organization. To ensure we do that, we must gather information about concerns and future trends from organizational resources – not HR resources. HR resources are often too narrow in their focus and concentrate on subjects that are specific to HR functions. But here’s the problem with that…

…that’s not what your executive team is reading about and using to develop organizational strategy. Your executive team isn't concerned about the value of training unless it can have a direct increase in productivity that is measurable and can improve cashflow and their financial position. Your executive team isn’t concerned about your wellness program unless you can identify how it will reduce healthcare costs for the workforce and free up cashflow. Your executive team doesn’t care whether your HR technology is sufficient, but being able to produce payroll accurately is critical. Your HR technology is only important if you can demonstrate how better data will improve your efficiency and ability to improve cashflow through better management.

Are you catching a trend here? That phrase you are hearing over and over. It’s cashflow.

Cashflow for an organization is very similar to your household budget. You’ve got your living expenses to pay every month like clockwork – electricity, water, car payment, insurance, childcare, rent or mortgage payment, credit cards, loans, etc. The organization has a very similar budget composed of expenses that come every month – payroll, payroll taxes, insurance for the workforce, insurance for the organization, rent or mortgage payments, electricity, water, technology payments, loans, etc.

Now imagine how you would feel if your monthly income was unpredictable or had a portion of it that was unpredictable. Some of you already know what that feels like; some of you have no idea. Suppose your income was dependent on sales and fluctuated each month, especially when the sales cycle took 3-6 months to impact your income. Or suppose your income comes from government payments, grants, or other forms of income. You have expenses that must be paid like clockwork – every month.

How do you manage when the income isn’t there because suddenly you have an expense like a car repair or a loss of a job? Your organization is in the same position – having to reinvent income, secure temporary loans, liquidate resources, develop a new product. This is the constant challenge of cashflow that every organization faces – it never goes away, it is a constant presence.

In a case study of Nike, you learn that Nike didn’t have positive cashflow until they went public – 25 years after their founding. Cashflow is a big deal and efficiency has a direct relationship with cashflow. Developing your HR strategy should always begin with improving organizational cashflow – this is where the win-win starts.  

#hrstrategies #hrstrategy #humancapitalmanagement #hr #humanresources #leadership #leadershipskills #leadershipdevelopment


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