Why do HR professionals need to develop strategic thinking and what are three things they can do to achieve this?

STRATEGIC thinking is not something that should be demanded only of the HR professional. To be strategic is to be perceptive and future-oriented, open-minded and proactive. The converse is to be tactical – whereas strategy is about planning your next move, tactics is the carrying out of that move. Strategy drives tactics but seldom is it the other way around.

As an HR professional, you need to develop strategic thinking because that is the only way you are going to get ahead and be successful. You need to think through the issues, want to solve the problems faced and be eager to see how your contributions are adding up to the bigger picture.

This is even more critical because you’ve already got a long history in administration and compliance. You’re often fighting against a reputation for ordertaking.

But as China Gorman pointed out in the Great Place to Work article, Why Strategic HR Matters and How HR Can Become More Strategic, “There isn’t an HR person alive, I think, that doesn’t understand the need to be more strategic and to be a greater part of the business. But, the regulatory and compliance laundry list of stuff that has to be done keeps growing and HR doesn’t have the budget or the staff to do much more than the day-to-day tactical—get people paid on time, make sure we’re not overspending our benefits budget, understand what the requirements are for the new health care environment, understand the staffing requirements coming from the state house or Capitol Hill, etc.”

These problems persist and yet, you must find a way forward for yourself if you are to change things. Therefore, in order to become more strategic, I suggest that there are three things you can do.

First, learn the finance piece well. This means understand how to read a balance sheet, profit and loss and cash flow. Understand all aspects of the numbers as it relates to your business. Take a course, study it on the weekends on your own or get help from a friend. If you’re in business, this is something that will hold you in good stead even if you are not in HR. Your goal should be to have between five to seven key indicators of your company’s financial health.

If you can master this, you can begin to have the right conversations with the right people and more importantly, you will have the right questions to ask. It is more than just understanding the balance sheet and income statement – you’ve got to be able to see and tell a story within those numbers. Any justification of HR initiatives needs to consider things like the cash flow analysis, breakeven point, net present value and the internal rate of return. One of the best ways to do this is to build a deeper relationship with finance.

The problem you face is that so much of what you deal with lies in the intangible. What can help you make good progress is learning how to quantify the benefits – the benefits of less time taken for training, of lowered training costs, of better quality of hire or improved span of control.

Second, become more entrepreneurial in approach. An entrepreneur takes risks but calculated ones. An entrepreneur has skin in the game. That makes all the difference to so many things the way he examines an issue, the way he makes his decisions. What this boils down to is what Professor Chris Roebuck calls personal responsibility. As Chris explained in an interview I ran with him in

2015 which was published in The Meaning of Personal Responsibility for HR, “The key test in whether HR is taking initiative is whether it is being perceived as adding value by the organisation. Yes, HR genuinely tries to make a positive difference whether it be to help individuals or the organisation perform better but it may not be perceived as such by those it is being offered to.”

What he said bears repeating below.

To be an HR Entrepreneur aside from good HR knowledge, you need an understanding of core business principles and your organisation. Do you understand good project management principles ? Do you understand the basics of profit/loss accounts ? The basics of the processes that your organisation employs? If you work in plastics, for example, do you understand the theory of how plastics work? That is critical information that HR must know even if it is at the most basic level.

Third, become a better communicator and influencer. The better you are at communicating, the better you will be at influencing. It requires an effective handle on managing change as much as learning better how to influence others. The end goal is simple – you want to be able to solve problems and make things happen. To do that, you need to get out of your silo and you need to have a clear methodology for how you will attack the problem. Part of this involves learning how to listen well and learning how to ask the right questions. All of this requires a ton of practice and a willingness to remain uncomfortable as you explore new and different ways of doing things. You’re effectively moving in unchartered waters. You can either go along a path that’s been mapped out by someone else, in which case, any contribution you make is driven somewhat by someone else’s strategy or you do this on your own.