Practicing Strategic HR to Drive Performance and Increase Value
This toolkit equips HR professionals with a comprehensive suite of resources and actionable insights designed to drive measurable value and strategic impact within an organization.
HR professionals have a mandate to drive meaningful business impact and demonstrate HR's strategic value to the organization's performance. This way of thinking affects how you measure success by focusing on initiatives that directly contribute to an organization's bottom line while enhancing the employee experience.
Practicing strategic HR enables organizations to attract and retain high-caliber talent, optimize workforce productivity, and build agile teams that can respond to market changes — ultimately supporting sustainable business expansion and resilience.
This idea, which can be thought of as business accretive HR, leverages data-driven insights and proactive planning to identify opportunities for operational improvement and innovation. By integrating HR metrics with financial and operational data, organizations can make informed decisions about resource allocation, identify skills gaps, and forecast future workforce needs. This approach not only reduces costs associated with turnover and inefficiency but also enhances employee engagement and leadership capability, creating a culture of high performance.
Aligning Culture Work to Your Strategic Business Plan
What happens when strategic goals, leadership, and workplace culture align? Organizations thrive. In this episode of SHRM's All Things Work podcast, Heather Haas, CEO of business management consulting firm Advisa, shares proven solutions to reconnect your team's goals with your organization's purpose.
Discover how reboarding — an innovative recalibration process inspired by onboarding techniques — can realign your workforce during pivotal transitions. Plus, learn actionable ways to enhance leadership effectiveness and find out how cultural alignment can accelerate growth.
Inclusion & Diversity with ROI
Inclusion and diversity (I&D) is increasingly recognized as a critical driver of business success and improved return on investment (ROI). Organizations that embed legally compliant I&D into their core strategies benefit from enhanced innovation, broader market reach, and improved employee engagement. When companies include diverse perspectives in decision-making, companies are better equipped to solve complex problems, anticipate customer needs, and adapt to changing market conditions. This strategic integration of I&D leads to tangible financial outcomes, including higher profitability and stronger competitive positioning.
- Inclusive workplaces reported up to a 19% increase in revenue from innovation, because diverse teams generate more creative solutions and products, in an October 2024 report by law firm Korn Ferry called The Innovation Matrix.
- Organizations among the top one-fourth in workforce diversity were 39% more likely to outperform all expectations and 27% more likely to outperform financial expectations, McKinsey & Company found in its 2023 diversity survey.
- Embedding inclusion in operational strategy reduces compliance risks and enhances brand reputation, both of which positively impact financial performance and ROI.
Strategic Talent Management
Aligning workforce capabilities with organizational objectives not only enhances employee engagement but also enables HR to deliver tangible value through improved productivity, innovation, and adaptability. HR leaders can systematically build a workforce that accelerates business growth and sustains competitive advantage. Here are some ways to think strategically about talent.
- Career pathing and ladders: Implementing structured employee career paths and ladders helps organizations retain top talent, reduce turnover costs, and ensure critical roles are filled with skilled, motivated individuals — directly impacting business performance.
- Change management: Proactively managing organizational change enables HR to minimize disruption, boost employee buy-in, and accelerate the adoption of new strategies, resulting in faster realization of business benefits.
- High-performance teams: A "high-performance work team" refers to a group of goal-focused people with specialized expertise and complementary skills who collaborate, innovate, and produce consistently superior results. Developing and sustaining high-performance work teams drives collaboration, innovation, and accountability, translating into higher productivity and improved business outcomes.
- Trend analysis: Identifying patterns in historical workforce data enables organizations to forecast future staffing needs, anticipate skills gaps, and make informed decisions about recruitment, development, and succession planning.
Pro Tip
Explore the role of skills inventories in crafting smarter HR strategies. Knowing what training is needed allows employers to budget for and determine appropriate training programs.
Revenue-Driving Talent Acquisition
When HR proactively sources and hires people who possess the skills and mindset to facilitate business growth, companies can accelerate project delivery, enhance customer satisfaction, and foster innovation.
A well-executed talent acquisition strategy ensures that key positions are filled promptly, reducing operational bottlenecks and enabling teams to seize new opportunities. Aligning recruitment with business strategy is critical for maximizing organizational performance.
Moreover, effective talent acquisition minimizes costs related to turnover, disengagement, and skills gaps, which can negatively impact profitability. Strategic talent acquisition not only fills immediate needs but also builds a pipeline of future leaders, supporting long-term revenue objectives. Here are a few ways talent acquisition drives revenue:
- Accelerates time-to-market by rapidly filling critical roles, enabling quicker project launches and service delivery.
- Improves customer satisfaction through the recruitment of skilled, customer-oriented employees.
- Drives innovation by bringing in diverse talent with specialized expertise and new perspectives.
- Reduces turnover costs by hiring for cultural fit and long-term potential, enhancing retention.
- Strengthens employer brand by attracting top performers who directly contribute to business growth and market share.
Stand Out with SHRM's Talent Acquisition Specialty Credential
Unlock your organization's competitive edge by mastering the art and science of attracting, engaging, and hiring exceptional talent. Design inclusive strategies, navigate global hiring complexities, and lead seamless virtual recruitment with ease.
Retention as a Profit Lever
High retention rates foster continuity, preserve institutional knowledge, and maintain team cohesion, all of which contribute to sustained business performance. Effective retention strategies not only lower expenses but also improve overall workforce stability, enabling organizations to invest more in innovation and strategic initiatives.
HR can proactively diagnose retention challenges in these ways:
- Enhance employee engagement programs: Implement initiatives such as regular feedback, recognition, career development opportunities, and wellness programs to boost job satisfaction and commitment, reducing voluntary turnover.
- Analyze turnover data: Examine exit interviews, turnover rates, and patterns by department, role, and tenure to identify root causes of departures.
- Address concerns from employee engagement surveys: Regularly collect feedback on job satisfaction, leadership, culture, and career development.
Pro Tip
Calculate employee turnover rate with this step-by-step guide.
Managing Your HR Department's Finances
Managing your department's financing effectively requires a structured approach, leveraging best practices and resources such as those provided by SHRM. These steps can help you through the process:
- Use the SHRM Department Training Budget Spreadsheet to forecast and allocate funds for employee development initiatives.
- Implement the HR Revenue and Expense Calculations Spreadsheet to maintain financial transparency.
- Refer to the HR Budget Planning Q&A for expert guidance on budget creation and management.
- Calculate HR bandwidth with an HR-to-Staff Ratio Spreadsheet.
- Visualize data with dashboards and charts for clear reporting to leadership.
- Review quarterly to adjust forecasts and ensure alignment with business objectives.
Compensation & Benefits Optimization
Incorporating compensation and benefits optimization into HR strategy allows organizations to proactively address evolving workforce needs and regulatory requirements. HR professionals can forecast trends and implement targeted interventions that enhance both financial and nonfinancial rewards.
This holistic approach supports long-term value creation, reduces turnover, and strengthens the employer brand — key elements of a business accretive HR function. Consider these options when trying to get the most out of your compensation and benefits packages.
- Conduct regular market benchmarking: Continuously compare your organization's compensation and benefits packages against relevant industry and geographic benchmarks. This helps companies avoid over- or under-compensation.
- Implement performance-based rewards: Align compensation with individual, team, and organizational performance metrics. Incorporate variable pay elements such as bonuses, profit sharing, or stock options that directly reward high-performers and incentivize good work.
- Personalize benefits offerings: Design flexible benefits programs that address the diverse needs of your workforce, such as customizable health plans, wellness programs, or remote work stipends. Use employee feedback and data analytics to identify which benefits are most valued and adjust offerings accordingly.
Pro Tip
Explore the SHRM Employee Benefits Survey, which offers rich insights and tools tailored to help you benchmark, modernize, and stand out in attracting and retaining talent.
Culture as a Business Asset
A strong, well-defined culture aligns employees with the company's mission, values, and strategic goals, fostering a sense of purpose and belonging. This enhances collaboration, trust, and accountability, which are critical for achieving business objectives and adapting to market changes.
Additionally, a positive and inclusive culture supports employee engagement, creativity, and resilience, empowering teams to deliver exceptional results. This not only boosts productivity but also drives innovation and customer satisfaction. Culture can be used as a business asset in these ways:
- Embed culture into leadership and HR practices: Train leaders to model cultural values and integrate them into recruitment, onboarding, and performance management.
- Encourage open communication: Create channels for transparent dialogue and feedback, building trust and agility across the organization.
- Measure and reinforce cultural impact: Use surveys, analytics, and recognition programs to assess cultural health and celebrate behaviors that drive business success.
Data-Driven Performance: HR Metrics That Matter
The right metrics enable leaders to link HR activities directly to key business outcomes such as revenue growth, profitability, and customer satisfaction — making it possible to justify investments in talent management and to identify areas for improvement. Analyze HR metrics — including time-to-fill, turnover rate and cost, vacancy rate and cost, recruiting cost ratio, and benefits costs per employee — to determine which are most relevant to your organization's business goals.
Integrating HR metrics into business reporting also enhances transparency and accountability across the organization. The effective use of HR metrics elevates the credibility of HR within the company, positioning it as a strategic function that directly influences business success.
- Focus on your business goals: Select HR metrics that reflect and support your company's strategic priorities, ensuring they provide actionable insights for leadership.
- Automate data collection and reporting: Use HRIS and analytics platforms to streamline data gathering, visualization, and sharing, making metrics accessible and timely for decision-makers.
- Regularly review and refine metrics: Continuously assess the relevance and accuracy of your HR metrics, adjusting them as business needs evolve to maintain their impact and usefulness.
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