Linking Human Resource Strategies to Business Strategies

African Human Resource Management (HRM) systems have evolved with time and are rapidly changing in the current climate. The initiation and development of Human Resource (HR) practices in Africa have been shaped by historical factors, such as colonialism, and they have been rooted in Anglo-Saxon and European traditions. The overarching influence of the colonial legacy on the economies of former colonies forestalled meaningful regional integration for many decades. However, the influences of globalisation of economic activities, imported practices by multinational enterprises, regional integration, changing political climates and cultural influences have all played a part in shaping contemporary HR practices across the continent.

The African workforce is highly diverse and young by global standards. Although Africa’s talent pool is slowly growing, it is still difficult for companies to find new hires with the right skills sets. Retention of skilled employees has also become a challenge. Over the past few decades, organisations globally have come to realise that an organization’s ‘human capital’ is one of its core competencies and can be leveraged as a sustainable competitive advantage. It has also become imperative for an institution’s HR strategy to be linked to its overall business strategy. There have been many cases of strategies being carefully crafted in Executive Boardrooms by top Executives and Consultants that fail to translate into higher revenues and profitability because the crucial ‘human’ element was not taken into consideration. Effective execution is key to a strategy’s success. Are the most qualified people assigned to critical business functions? If a company has a high turnover rate and they are unable to retain their talent, then even the best strategic plan is bound to fail. Companies need to examine their strategy through an organisational lens and take into consideration business resilience, demand planning and succession.

Strategies that enhance an organization’s ability to retain the best-qualified employees can include; incentive pay, competitive wages, paid training opportunities, professional development and promotions. These elements need to be embedded in an institution’s business strategy as a key pillar. This article aims to elucidate best practices that can help the Human Resources department to become part of the broader business decision-making process. HR departments need to be viewed as an Executive-level, strategic function rather than a mere service-oriented function.

The HR Department Must Have a Seat at the Table

The HR Director must be part of the planning stages of strategy development. The HR department has a bird’s eye view of the entire organization. As companies shift their strategic focus to navigate the continuously changing business environment, the associated changes in business decisions have a human impact. HR departments can be leveraged to understand the implications of strategic decisions on employees. A go-to-market strategy will involve everything; from changes in production, brand messaging, product roadmaps, sales processes and distribution. These strategies will impact people across many departments and will need their buy-in in order to be successfully realised. HR departments are best placed to understand the mobilisation of human resources and organisational changes that will need to be factored into the strategic planning processes.

The current business realities are forcing many companies to accomplish more with fewer resources. With inflation soaring globally, some businesses may be forced to downsize employees. The ‘Great Resignation or Reshuffle’ has also caused shifts in the global labour market. Fewer people may be available to accomplish necessary business functions. The HR department will need to play a part in restructuring business functions and improve working conditions for employees so the execution of business strategies do not come to a grinding halt.

When HR has a seat at the planning table, they can forecast how many people will be needed and what skill sets should be prioritised for effective strategy execution. HR can inventory the current workforce and see who can be promoted to new positions and what training gaps need to be addressed and what recruitment and outsourcing strategies can bolster existing resources.

Securing and Retaining the Right Talent

Winning the current war for talent should be a key strategic focus for any organization that wishes to succeed in this competitive climate. Before recruitment begins, HR needs to have clarity about the strategic function of every job and where that recruit will fit in the organization, what they will be expected to achieve and the skills required to effectively perform the job. With this clarity, HR professionals will be in a better position to judge candidates that fit the job. HR should be able to articulate the incentives for employment at their organisations to potential candidates. By aligning people to company goals, HR can ensure they will fulfil the strategic purpose of the various roles that need to be filled. Ensure the potential recruit’s personal values resonate with the organization’s values.

Aligning and Driving Performance

Effective business strategies are also tied to clear key performance indicators (KPIs). HR needs to align the overall business strategy with clear performance benchmarks. Aligning organisational objectives with the company’s values are also important. HR should ensure that all departments are aligned and moving in lockstep with the rest of the company. Most companies have adopted project management systems where cross-functional teams work towards achieving specific goals. When there is universal buy-in and alignment across teams, goals are more likely to be achieved.

When the right goals have been delineated, specific action plans need to be formulated. Heads of departments can work with HR to cascade the strategy to their personnel and devise appropriate work plans with clear milestones and benchmarks to enhance performance. Employees should understand how their work impacts company objectives so that they feel a sense of ownership and significance. Employees who do not feel engaged are more likely to feel disenchanted with their workplaces and will begin looking for greener pastures.

Employee democratisation can help to make an individual more invested in the company they work for. Involving employees from all hierarchical levels in decision making will encourage them to engage actively in shaping the organization and positioning it for future success. When employees feel fully invested in outcomes and really believe in what the organization stands for, they will ‘pull together’ in ways that can create synergy and drive performance across the organization.

Driving Change Management

The best HR practitioners are always their ‘fingers on the pulse’ of collective employee sentiment that ripples throughout their organisations. They are ideally positioned to act as effective advocates and change agents to ensure strategy implementation is successful. They can also gather feedback from employees that can help the organization keep track of the ripple effects of strategic implementation on operational procedures and market reactions.

Additionally, HR staff can train the company’s workforce to be sensitive to spotting opportunities in the changing business environment and providing the right business intelligence that can inform strategic planning and adjustments that need to be made according to the realities on the ground. A company can gain competitive advantages when it is poised to be agile and adjust quickly to changes in the environment. If the workforce is malleable and can embrace and absorb changes rapidly then the entire company is positioned to thrive rather than survive disruptions in the business landscape.

As much as the COVID-19 pandemic and globalisation showed us how interconnected and similar our world is, doing business in Africa poses unique challenges. Although there are HR practices that are globally relevant, business and HR strategies should be attuned to local shifts in the business environment and local talent pools. Africa is often referred to as ‘the continent on the rise.’ Rapid urbanisation, the rise in consumer spending power and economic growth position the continent as an attractive destination for multinationals to invest in. Africa is home to many countries with many languages, customs and cultures. When it comes to HR strategies, adopting global best practices where they are applicable will certainly help companies to improve their talent management. However, there is no ‘one size fits all’ approach to HR strategies. The cultural nuances that play a part in shaping HR policies also need to be factored into business strategies.  HR Leaders in Africa are increasingly being called upon to share regional best practices and innovative talent management strategies that make sense in an African context.

About the SBS Annual HR Summit

The Annual HR Summit is an initiative of the SBS Executive Education Department to support HR business leaders navigate through, thriving, and optimising their human capital. The theme of this year’s summit is: The Great Resignation: Are African Businesses Off the Hook? Learn more about the Annual HR Summit 2022 here

Article by Shailja Sharma, Executive Fellow and Coach

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