In the past few years, business conditions have arisen which mandate
greater competitive advantage from HR agendas and processes. To add
greater competitive advantage, HR must contribute strategic value against
criteria from customer and capital markets. Furthermore, HR can add
strategic value either reactively or proactively.
In its strategically reactive mode, HR assumes the existence of a
business strategy and adds value by linking HR practices to the business
strategy and by facilitating change management.
In its strategically proactive mode, HR creates competitive advantage
by creating value before the competition by creating cultures of
creativity and innovation, facilitating mergers and acquisitions, and linking
internal processes and structures with ongoing changes in the
Seven steps for aligning HR to business strategy
Professionally managed companies, such as Unilever, Citicorp, Hewlett
Packard, AT&T and others use this basic framework to make sure their HR
practices are fully and exactly aligned to create the organisational
capabilities required to execute strategy in the most powerful way
Identify the organisational unit for which a human resource strategy is
being developed. This would be your SBU or business division.
Identify and prioritise the externally driven forces and trends in your
business environment that are influencing your business unit
In the context of the externally driven forces determined in step 2,
determine key sources of competitive advantage. Identify 3 to 5 measures
of success for each source of competitive advantage
Identify the cultural and technical capabilities that you need to have
to win in the market place. What mindset and behaviours do we need to
have more of in the future than we have had in the past in order to
achieve our numbers to a greater extent in the future than we have in the
Identify behavioural examples for each category of organisation
Do a gap analysis
Identify which HR practices will have the greatest influence on
creating your ideal human organisation. Ask yourself: What major HR practices
will best create an organisation with the above cultural capabilities?
Which practices will have the greatest influence? In what order and
over what time frame should the initiatives be implemented?
Decide how the identified HR initiatives need to be created or changed
in order to create your ideal human organisation. Which HR practices
will receive attention over the next 12 to 18 months? What changes need
to occur in each HR practice so that each practice will be more
effective in creating these cultural capabilities in your people?
Identify action plans
What will be done? By whom? By what date?
Who else needs to be involved?
When will the progress be reviewed? By whom?
What are the purposes of the measurements?
What results do we want to measure?
Who should be the sources of data?
How should we take the measurements?
When and where should we take measurements?
The most difficult part in measuring HR is knowing what to measure, not
doing the measurement itself. Once we know what to measure, measurement
can occur very quickly. In a complete HR measurement system, you have
to measure what HR does, what it delivers and what it impacts. Thus one
can show the relationship between what HR does, what it delivers and
what it impacts.