Human Resource

HR’s role in strategy formulation and interpretation

By May 2, 2019 No Comments

What is the role of an HR executive in strategy formulation? One of the most important factors to be considered is that HR’s strategies must be aligned with the company’s ideologies.

Strategy Formulation:

Three levels of strategy formulation:
Corporate, Business unit and Functional level

Corporate-level Strategy:

What are the kinds of business should the company operate in?
This is the question that should be answered at this level. This strategy will be in regards to higher authorities. The line of business will be more than one. The target is to incorporate innovation along with the growth of technology.

Business-level Strategy:

This will be a follow-up of the corporate-level strategy. While we answer the question what kinds of business the company should operate in, this unit should answer the question, “How should we compete in the chosen industry or business?” At this level, the competition is with other players in the industry. The target here is to build a unique system which stands out in the market.
A single company that operates within one industry is also considered a business unit.

Functional-level Strategy:

Each company will have its own departments functioning simultaneously. Although each departments’ function is separate, one’s function will affect another department invariably. So it is important to strike the balance between looking at a department separately together.
Operating at different levels, an HR must know to use different kinds of strategy at different levels. They must create a positive environment despite the competition in the market. It is also important to set the culture in such a way that it must match the company’s strategy creating an impactful performance.

Here are a few basic steps in HR strategic formulation:

Be clear whether the HR strategy is meant for corporate, unit or functional level strategies. The decision is simple in as much as the same HR strategy shall be relevant for any level strategy.
Next step is to identify the trends in the environment. Environmental scanning helps delineate the major trends.
The third step is to have a SWOT analysis of the firm. Scanning the internal environment of the business helps to list out its strengths and weaknesses and that of external environment helps identify opportunities and threats.
The fourth stage is the identification of key HR practices.