Most people who start a business know that, at some point, they’re going to be involved in human resources. Some people use HR as a success metric: they’ll know their business is successful when they’ve hired enough people to need HR. But as with many other fields, there are different kinds of HR, and it’s important for business owners to recognize the difference between tactical and strategic HR.
If you look at the skill sets involved in tactical versus strategic HR, they’re all necessary in some way to keep your business running. But you need to understand the difference between the two so you don’t hire the wrong HR-based skill set for your company’s needs.
Tactical HR is about making sure things get done in the right order. This is the compliance piece, which is based on the number of employees in your organization and the various laws and regulations you must follow. Tactical HR is the stuff you need to run the back office as it pertains to employees, which is important.
Strategic HR looks at the demographics of your business and your industry and the competitive nature of the positions you’re recruiting for currently. Where do you want to go as a business? What’s realistic in terms of growth? What do you need to be prepared for when it comes to employees? What benefits do you need to offer to compete as a small business against larger companies?
Reading those two summaries, you may be thinking that tactical HR is the most important. And yes, you absolutely need tactical HR, but there’s not a lot of return on investment there. It hits your overhead, but you need it, so you find a way to get it done.
Strategic HR represents a higher ROI. It’s about understanding the numbers and what they mean for your business. It plays into employee retention and profitability in your bottom line. It’s about taking your business to the next level and understanding what’s necessary from an employee standpoint to make that happen.
Whether you’re hiring an employee or contracting with a consultant, you need to clearly define what you’re looking for in terms of HR support. Payroll companies and professional employer organizations (PEOs) are heavily tactical, and there aren’t a lot of HR companies out there who truly focus on the strategic side of HR.
Ultimately, you need both. Like anything else in business, it’s about balance. But there’s a lot of money wasted because people don’t know what they need or what they’re doing when it comes to managing the HR side of their business. Take some time to think about your business needs and determine which type of HR you need the most for your business goals.
At Why HR, we focus heavily on the strategic side of HR to help your company grow while also supporting your tactical needs through direct support or by connecting you with a trusted provider. Ready to take your company to the next level? Contact us for a conversation.