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The world of HR can get pretty complex the deeper you dive into it. In today’s dynamic business world, companies need more than just efficient operations to thrive—they need a balanced approach to managing their greatest asset: their people!
While essential HR functions like payroll and compliance ensure daily operations run smoothly, strategic HR takes a forward-thinking approach to talent management, shaping the organization's future through culturally impactful practices. To remain competitive, businesses must blend both essential and strategic HR efforts to create a comprehensive system that drives growth, promotes innovation, and builds a resilient team. Here's why having both is no longer a luxury, but a necessity for long-term success at any company.
First, it’s important to understand the true definitions of essential HR and strategic HR and how they complement one another.
Essential HR is, well… essential to your business to remain compliant. Elements of essential HR include payroll, the employee handbook, PTO, insurance, benefits administration, workers' compensation, background checks, etc. Essential HR represents more tangible aspects of HR that are needed, at minimum, to hire your team and keep your business up and running. If executed correctly by experts, you can save a ton of time and money.
Strategic HR takes the HR structure a step further than the basics. Strategic HR aims to integrate HR policies and practices with the organization’s strategic goals. It underlines talent management, leader development, and building a culture that fosters competitive strength. Strategic HR gives the HR department a seat at the table, supporting the initiatives for how the company aims to position itself. This should absolutely be a component of the company’s long-term growth and retention plan.
Together, these HR components blend compliance and strategy for a well-balanced HR department. After all, the people are the lifeblood of your organization, and you want to ensure that they are not only taken care of but satisfied and aligned with the direction the company is headed.
At FullStack, we have a lot of fun helping our clients manage the people side of HR. That way, we can help free up time and resources for your team to tackle strategic HR.
Strategic HR is a proactive approach to how you treat your employees and align them to your company goals. Here are some factors to consider:
By taking these considerations into account, you can build a well-rounded strategy that will help attract and retain staff.
We cannot stress this enough… balance is key!
Many companies will start out prioritizing essential HR. While this is important for compliance purposes, it does not serve the full spectrum of needs within an HR department. Especially for small to mid-sized organizations, oftentimes one singular person will manage HR duties.
While it is possible for one person to do it all, we do not recommend it. From what we have seen in our years of experience, these HR professionals are usually tasked with putting out administrative fires, which leaves less time and space for a strategic focus. At the end of the day, compliance is important, but it will not help you grow your people.
One way that organizations try to improve their culture is by gathering feedback, which is a great strategy. However, a word of caution: don’t ask for feedback on things if you’re not prepared to make changes based on what you hear. Asking for feedback while being unprepared harms the organization because the team will believe that you don’t care to make the changes.
On the strategic side, it’s important to remember that building, refining, and approving a strategy takes a big investment of time. Let’s say that you want to make more of an investment in strategic HR, but the economy or new legislation throws some curveballs, forcing the organization as a whole to pivot. While we may start out with the best intentions, the health of the business comes first, which means that strategic HR initiatives you wanted to put in place may get set on the backburner. It can be frustrating, but it’s important to be prepared for that reality. Plus, at the end of the day, essential HR still has to get done for you to remain compliant.
As technology continues to evolve, HR processes will become more cost-effective and efficient. While this may reduce some operational expenses, the cost of implementing sophisticated HR platforms could offset those savings. However, the human element will remain crucial in HR.
Employees still need live interactions to feel truly heard and supported. No matter how advanced AI and bots become, they can’t replace the empathy and understanding that comes from human connection. A bot can’t address the nuances of employee concerns or provide meaningful emotional support.
While technology will improve how we measure payroll accuracy and other metrics, gauging employee satisfaction is far more complex. Just because employees stay with a company doesn’t mean they’re content. Their loyalty could stem from a fear of change, a reliance on their benefits, or other pressures, making it essential for HR to maintain a human touch even in a tech-driven world. Make sure your HR strategy is first and foremost people-focused.
Outsourcing HR to a PEO can be a game-changer for businesses balancing day-to-day tasks with long-term strategic goals. This is especially helpful to small or mid-sized companies that may not have the resources to separate strategic and essential HR roles.
The advantage of working with a PEO lies in its ability to streamline administrative processes and remove the hassle of managing time-consuming HR tasks. For growing companies, these tasks can quickly become overwhelming and distract from core business objectives. By shifting those responsibilities to a PEO, businesses can save time and reduce errors, freeing up valuable resources. With more time on your hands, we suggest strategizing one HR goal per year for the company that can be executed consistently.
The cost of hiring a PEO is minimal compared to the time and productivity it can save. Instead of investing in a larger internal HR department or keeping up with ever-changing labor laws, you pay for a service that ensures compliance, mitigates risk, and allows your HR team to concentrate on strategic growth. This approach creates a balance between essential HR administration and the strategic HR goals that drive your business forward, making the investment in a PEO not just practical but essential for long-term success.
Want support so your business can focus more on strategic HR? Let’s talk. Contact us to start the conversation.