How Tactical HR Drives Strategic HR
Benetech recently hosted a webinar entitled Improving Strategic Decision-Making: The Unsung Case for Human Capital Management Software. For those who attended I enjoyed our time and appreciate all the great feedback. There was a question posed by one of the attendees that I received after the fact, and saw it as a great question worth sharing with regard to the relationship between tactical HR and strategic HR.
Question: How does this (improving tactical decision-making) relate to strategic decision making? You are talking about tactical things. Strategic thinking is longer term, for instance, what kind of employees will we need for our new product line.
I agree that strategic HR decision-making will typically look to the long-term vice the short-term, while tactical HR deals with more of the everyday transactional processes. The webinar did intentionally deal at the tactical level. Tactical decision-making can have strategic implications (ie. Compliance assumptions can lead to costly litigation and labor assumptions can lead to inflated overhead and reduction in competitive pricing). If we were to consider the relationship between the two, we might say that strategic thinking informs the tactical, but tactical decisions constrain or expand strategic potential. Therefore, expanding the limits of strategic HR capacity, in a way, originates in refining decisions and freeing resources at the tactical level. (further unpacked in Dwane Lay’s Lean HR)
The strategic is very much contingent on the tactical. In larger organizations I’ve seen a greater level of attention directed toward deliberately developing conditions at the tactical level to foster better decisions (the foundation of a results-driven culture) throughout the organization. They have the resources available (time and accessible data) to do so.
In the mid-market (call it 50-500 EEs), employers often treat personnel administration as a necessary evil or pure-cost afterthought, which I'd argue to be short-sighted. As a result, their strategic-level thinking encounters constraints imposed by poor tactical decisions (inflated labor and compliance costs) at the tactical level. Broadly speaking, for these employers there is a gross unawareness of the opportunity costs associated with their current personnel and data-management practices, and the unclear ROI associated with investing in an improved workforce management solution gives leadership just enough comfort to continue to kick the can of total workforce management improvement down the road to an indefinite date. Citing Edward Lawlor’s HR research study, Effective HR Management, (see blog) until HR is relieved of the day-to-day transactional responsibilities their strategic impact on the organization will be limited at best.
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Related Blog: Strategic HR: What it Means and How to Get There