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Aligning HRM and Organizational Strategy

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  • 0:02 Planning for Goal Achievement
  • 2:04 Linking HRP to Strategy
  • 3:32 External & Internal Alignment
  • 4:42 Lesson Summary
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Lesson Transcript
Instructor: Shawn Grimsley
Successful businesses have a strategic vision and know how to implement it. In this lesson, you'll learn how human resource management (HRM) can align its organizational functions with the overall strategy of its organization.

Planning for Goal Achievement

Henry is vice president of the human resources department at a company that manufactures office furniture. He and his fellow VPs are meeting with the company's president to strategize for the future. As VP of human resources (HR), Henry is concerned about three different types of organizational planning and how they relate to each other. Let's take a quick look at each.

Strategic planning is a process used by an organization to determine its long-term vision and goals and how to accomplish them. It looks at where the company is, where it wants to be and what it needs to get there.

Human resources planning (HRP) is the process for anticipating the needs of the organization regarding the deployment of human resources in the most optimal manner possible. In other words, it's making sure that the organization has the right people with the right skills in the right places at the right time. Three key areas of focus include forecasting, or predicting, the organization's labor demand, analyzing the organization's current supply of labor and trying to balance the projected future demand against current supply.

Strategic human resource management (SHRM) involves melding strategic planning with human resource planning. It is the process by which human resources planning and activities are integrated into the organization's strategic plan so that human resource management (HRM) is clearly linked, or aligned, with the achievement of the organization's goals.

The company, with Henry's help, wants to effectively link, or align, human resource planning with its overall organizational strategy so they seamlessly fit together. Otherwise, HR planning may not be effective in helping achieve the goals of the company. For example, if the goal is cost cutting and savings and HR is spending buckets on hiring overpriced employees, then there is a misalignment of HR practices and organizational strategy.

Linking HRP to Strategy

As we discussed, strategic human resource planning is about linking human resources planning to the company's strategic planning to ensure that human resource activities are supporting and advancing the organization's strategy. Two key areas where human resources planning and organizational strategy need to be linked are at the time the organizational strategy is formulated and at the time it is implemented. Let's see why.

Human resources should play an important part in strategy formulation because human resources can help the company determine whether a strategy is feasible given current levels of human capital at the company, often referred to as 'inputs.' In other words, Henry can help determine whether the company currently has a sufficient number of employees with the requisite knowledge and skills to realistically pursue a strategy. For example, if the company wants to start its own e-store, Henry can help determine whether there are employees with the necessary skills currently available to implement the strategy.

Human resource planning is also important for strategy implementation. Remember, everything a company does takes resources, whether it is money, machines or people. Henry and HR play a vital role in the allocation of human resources throughout the implementation process. He makes sure the right people with the right skills are in place for successful implementation.

External & Internal Alignment

Henry and other practitioners of strategic human resource management must also ensure that HR is both externally and internally aligned. External alignment is the alignment, or fit, between the organization's strategic goals and HR policies and practices. If the current strategy is to innovate, then HR policies should be focused on encouraging innovation. For example, it may recommend a revision to the compensation system that rewards innovation through bonuses.

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