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Wiebke Apitzsch
Wiebke
Apitzsch

Human Resources and People Strategy – What Is the Difference?

11.12.2019
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Have you noticed it yet? As soon as it becomes difficult to find suitable employees, many companies start vividly discussing the crucial importance of “people business”. In times when talent is scarce, the HR department is often made more responsible. In this context, the question usually arises as to which tasks in the company human resources is actually responsible for?

This blog post examines the difference between “classic” HR tasks and the strategic responsibility to formulate a future-oriented People Strategy. We use the term Human Resources (HR) to refer to conventional, more administrative activities in HR management. A People Strategy expands the conventional range of HR tasks with a new strategic approach - “HR classic” plus People Strategy. Besides the conventional efficiency and compliance-related tasks, the new HR role incorporates strategic development and sustainability responsibilities.

A Sustainable People Strategy Becomes a Critical Success Factor

As Chief Human Resources Officer (CHRO), you are well aware that people are crucial and that they form the basis and shape the future of your company. Valuable talent is scarce and having the right people in the right place at the right time is critical to the long-term success of your business. As a responsible manager, you should therefore ensure that developing a sustainable People Strategy is an integral part of your HR work.

With this blog, we want to help you evaluate your status quo and sharpen your focus with regard to the potential of your people management.

HR and People Strategy: Same Same, But Different

At first glance, the classic HR department and a modern HR function that incorporates your People Strategy are actually quite similar: both recruit, shape the working atmosphere and keep an eye on further training. Here are some of the most decisive differences:

  • The main focus: Administrative vs strategic tasks
  • The mission and mindset: Fixed mindset vs Growth mindset
  • The understanding of roles within the company: Backoffice department vs Business partner

Let’s look at these points in detail. For the sake of clarity, we have formed two distinct opposite poles. Of course, there are many fixed forms in between.

The role in the company: Managing the day-to-day business vs leading the company

A classic HR department sees its role as providing “human resources”. It thus plays an important, albeit not decisive, role in the company. To put it bluntly, HR keeps the shop running. The department deals with contractual issues, complicated regulations as well as the needs and sensitivities of people.

The other departments can devote themselves to their tasks without being distracted by HR tasks - be it the development of a business vision, customer care or controlling.

In the role of “gatekeeper”, a HR employee works closely with the division heads of a company. In doing so, the classic HR department adjusts itself to departmental and corporate goals without significantly influencing them. If the company were a ship, HR would take on the role of watchkeeper on the command bridge.

The people strategist adopting a modern HR approach would take the role of first mate. They are involved in corporate management and help to make key decisions. To stay with the analogy, they steer the ship and discuss the course with the captain. They help shape business objectives and act proactively to achieve them, seeing it as their task to maximize human capital

A HR approach centered on a People Strategy is always part of the solution and is a common thread that permeates all meetings and negotiations. This means that the people strategist is internally well connected and dependent on all other departments for their work. Ideally, the entire company should be aware of the crucial role played by the People Strategy and cooperate with those responsible, for example, by providing information.

Use case: Sales department introduces a digital sales method

In the world of classic HR, this is a topic that doesn’t initially concern HR staff, but rather the sales department itself. Sales processes are reviewed and the management team holds a meeting with the sales manager. The classic HR department will probably then be asked to schedule a training session with an expert once the project has started. In other words, it reacts to the situation.

Where there is an established People Strategy, however, the situation looks rather different. The people strategist, together with the management team, is the first to learn about the transformation project. They know the skills of employees and, in cooperation with sales managers, evaluate which team members may have difficulties adopting the new method. Long before implementation, they organize individual training courses and, if necessary, initiate the search for qualified talent to strengthen the team so that the sales organization is well prepared for the project.

Focus and mindset: Solving current challenges vs laying the foundation for future growth

In order to understand the differences in mindset, we need to take a look into the past. Previously, people working in human resources thought and operated within fixed boundaries and had to follow strict guidelines. Even today, these limits can be perceived in the mindset. When it comes to employee administration, the focus is on compliance i.e. compliance with the company’s rules and regulations.

The classic HR approach includes evaluating the past in order to manage the present well, avoiding mistakes and reacting to problems. Overall, these characteristics result in a fixed mindset. By contrast, however, the ideal people strategist has a growth mindset. They work proactively and identify opportunities to make a greater contribution to the long-term success of the company. They always have an eye on the future and view matters from the perspective of the entire organization.

Practical example: Recruitment criteria

In the past, there were exact catalogues that outlined the requirements for each vacancy. Today, however, the job market is much more versatile. Flexibility, openness and a feel for social and market trends are the key to success: applicants with unusual CVs are usually the most exciting and the best candidate may not always be the one with an MBA.

Business areas: Tactical vs Strategic actions

A classic HR department manages the company’s employees and sets up HR programs and bonus systems. It deals with compliance, benefits, training, personnel controlling and salary. It adopts certain tactics in order to achieve results.

A HR function adopting a People Strategy looks at these issues from a higher perspective. To go back to the analogy of the ship, the people strategist sits at the crow’s nest and has the entire ship and waters in view. The classic HR manager, on the other hand, stays in the stern of the ship and mainly analyzes swirls in the water.

This results in expanded business areas for the People Strategy that require strategic actions:

  • Help to shape corporate strategy
  • Analyze personnel and skill requirements in a data-driven way
  • Attract and inspire talent for the company
  • Manage, build and develop skills
  • Retain talent within the company

You can read more about this in our article: 4 Steps to a Winning People Strategy for the Future.

Practical example: The difference between tactics and strategy

A strategy has a larger scope and requires several tactical measures. Organizing an onboarding lunch is a tactical measure within a larger strategy. This could be to bind employees to the company from the outset in order to stay ahead in the “war for talent”.

From Classic HR Management to a HR Function Centered on a People Strategy

Your HR department should be at the heart of your company’s growth strategy. It needs the right mindset, as well as the capacity and authority to do things. Most importantly, it needs the trust and ear of the company and its management.

Once you have recognized the potential of the People Strategy, you should approach your HR department. It is already connected to the entire company. You can now breathe life into this connection and encourage your HR team to play a leading role. We will be happy to help you outline the steps you need to take. Get in touch!

 

 



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