How HR can contribute to business success: the HR professional as a participant in business strategy making

HR needs to become a participant in the business strategy-making process and proactive thinking needs to be encouraged in this area, said Erika Bagdiné Fodor, Managing Director of ExperiZest Ltd., in a statement to HR Portal. She added that by developing a motivation system, assessing and even, if necessary, strengthening the mental health of the professional, continuous managerial feedback, assertive managerial communication, practicing constructive attitudes, involvement in daily processes, or even developing self-awareness, self-confidence and positive attitudes, training can help in practice.

Questions HR managers can ask:

- In an HR position, how should we take time to think business?

- How do we communicate with our senior colleagues?

- What communication techniques can we use to be effective - for example, assertive communication, questioning techniques, common company language.

- How can we build a proactive network of relationships?

- How do we monitor daily trends?

Looking at specific tools to help HR professionals better understand business challenges and achieve company goals, a list of metrics and KPIs is one of the best tools they can have at their fingertips. In addition, employee feedback, business, industry and labour market trends, statements and surveys, the company's forward-looking business plan for the years ahead, strategic guidance, investment plans, financial statements, and the experience shares, feedback and forecasts of the company's external partners are all targets of the HR professional's focus.

Reduction of turnover, maintaining or increasing wage costs at or around the normal rate, statutory or inflationary, increase or decrease in headcount, employee satisfaction, among many other unlisted indicators, are definitely essential elements of cost effectiveness

In addition, manufacturing or operational process metrics can also see significant improvements by linking HR and business thinking. Think about it, a technician who has been with your company for several years is already experienced, knows his job, makes fewer mistakes and thus produces less scrap, for example. Minimizing scrap generates a positive result in the budget. With a good HR strategy, employee turnover and attrition slows down, a reliable workforce gives the company security and has many positive consequences. If a link in the machine is missing or weak, it immediately creates a problem and puts an extra burden on an area. There are so many ways in which HR can get a picture and an indicator of the level of business thinking in any area and, hopefully, its positive consequences. Development or crisis management cannot be successful without the coordinated work of all areas," he stressed.

Multifunctional HR

Barbara Schmidt also highlighted that the role of HR is multifunctional. If HR has a business perspective and the competencies needed for strategy making, it takes on the role of programme organiser, moderator, facilitator in the strategy making process. In organisations where HR does not have these competencies or is stuck in the HR silo, management typically does this without HR, perhaps using a consultancy firm. HR defines its development objectives in line with the vision and based on the business strategy, and derives its own OKRs (Objectives and Key Results) from the business objectives.

BMC (business model canvas) is a proven tool for better understanding business challenges and agile strategy development, he said. HR works with the business to create the organisation's BMC - a deeper understanding of the complex processes of the business model, resources and the company's value creation process. He believes that knowing and thoroughly understanding the BMC is a prerequisite and the first step in HR's business thinking. As a second step, it is worthwhile for the HR organisation to model its own HR BMC on the business BMCwhich demonstrates the role of HR in the value creation process of the company. While the company's objective is to create customer value and its activities result in profit, HR has a supporting function. This means that HR needs to support the value creation work of its customers, its employees. Another tool for HR to better understand business challenges is the OKR system. OKR is a strategy planning, communication and execution method that creates a link between the top-level strategy of the company and the goals of its departments. Its starting point is that effective operations are ensured by setting goals, not activities. Goals enable people at their own level to plan, design and adjust the activities needed to achieve them. Thus, the OKR system enables an agile organisation that is not only empowered but also more responsive to change

The organisational development consultant says the presence or absence of trust is the measure of the effectiveness of integrating HR and business thinking. HR that understands the business will be seen to be gaining trust, empowerment and buy-in from the organisation's senior leadership. HR with a business mindset is an equal member of the board, is taken seriously and contributes to the bottom line as an agile coach, internal consultant, respected people, organisation and culture developer. And those stuck in the HR silo, just following the business and not understanding the business, do not enjoy the trust of senior leaders and management.

As long as the HR leader defines himself as 'just' a professional leader - reflected in his approach, priorities and proposals - the company's leaders will not perceive his connection to the business, says business consultant, Interim HR Leader and HR Mentor, founder and owner of HRLead, Martin Gyöngyvér. And a fundamental prerequisite for this attachment is the acquisition of a business mindset. Under normal circumstances, the company's top executive should invite the HR leader into the business strategy-making process. If this does not happen, the HR leader should proactively propose and justify this request to the manager.

Participation in the process will add value to the company if the HR leader has a strong strategic orientation. This includes business vision, strategic thinking, action and influence. The business vision is a desired future statement of what the company wants to become in the future. The vision should be motivating, inspiring, forward-looking and evoke strong emotions. Strategic Thinking is both a skill and a proactive process that anticipates the future and explores possible alternatives for the business. Strategic action is the articulation of strategic priorities into actionable action plans and the effective implementation of those plans. And Strategic influence is the ability to influence others to take action to achieve one's own goals. It can be encouraged by engaging from within, by illuminating business goals and contexts, by dialogue, by asking questions, by practicing. Anyone who wants to make progress in this area should learn.

For an HR professional to develop his or her business thinking, a detailed knowledge of the business environment - see trends, economic influences, knowledge of competitors, technological developments), business strategy and corporate financial plans and indicators - is a good start. Cleverly designed and managed stakeholder management and consciously building an internal/external network of relationships is essential. Engaging and cooperating with different communities is important. And the dot on the i is the future consciousness (ESG) efforts.

How HR can contribute to a company's success

Adám Mézes, People Manager of O-I Hungary Kft.