August 2nd, 2021

How to Improve Your HR Strategy: Proactive vs Reactive HR

How you approach your human resources strategy has a huge impact on your company’s success. HR can either be the cause of problems in your organization or the solution — whether you use a reactive or proactive HR strategy will determine what outcome you get. 

The Importance of an HR Strategy

The function of HR requires a lot of tedious administrative work. Research from Deloitte, reports that 41% of your or your HR team’s time is spent on tactical HR work. This takes valuable time away from focusing on your people and culture. But the same research found that focusing on HR strategy results in a more positive impact from HR. 

But it’s easy to get caught up in tactical HR work when dealing with HR problems. Most HR problems are a result of employee performance, a bad hire, or a compliance issue. According to the Department of Labor and Statistics, the cost of a bad hire can be 33% of that employee’s salary and benefits. And the cost of compliance issues can range from a thousand to tens of thousands of dollars depending on fees and lawsuits. 

If your only strategy is to react to HR problems as they occur, you’re preventing your company from growing and putting your business at unnecessary risk. 

Determining whether you’re handling HR proactively or reactively can help identify solutions to improve your HR so you can better hire, retain, and manage people — and also save time and money. 

What an HR Strategy Entails: Reactive and Proactive HR 

HR typically falls into the category of important but not urgent work — until it is urgent. But every human resource strategy should consist of HR practices and activities to address this kind of work: 

  • HR practices are more strategic and are aligned with your business goals. Examples include performance evaluation processes, defining your culture, employee recognition programs, and restructuring efforts. 
  • HR activities are tactical in nature. They may be tedious but they are required to run your business. Examples include payroll, benefits analysis and administration, workplace compensation, and compliance. 

HR activities are associated with purely reactive HR while HR practices are a part of proactive HR. 

Reactive HR is a traditional approach to human resources. It’s where HR or business leaders only make HR decisions as they’re needed or based on prior experience. A reactive strategy sets in motion certain HR activities to solve problems such as termination, layoffs, compliance, or legal issues. Many small to medium-sized businesses only have time to use this method when managing their employees. 

While a reactive HR strategy allows decisions to be made quickly, it also means those making the decisions may not have all the information they need to make the best decision and prevent future problems. This kind of strategy usually comes at a higher expense as well. Reacting to problems as they occur requires immediate time and resources to solve them. A better plan would be to think of HR more strategically through a proactive approach. 

Proactive HR studies the business and its goals to identify potential problems and create practices to prevent or address problems before they occur. Often data and workforce planning are used to create a successful proactive HR strategy. For example, prioritizing how to hire people and improving compensation, training, and turnover are all aspects of this approach. Proactive HR even applies to the benefits you provide your employees to the management practices your leadership team uses. 

Ultimately, this strategy relies on better timing of HR practices and planning to expand the impact HR professionals can have on the bottom line of an organization. You wouldn’t run other functions of your business in a reactive way — so HR shouldn’t be run that way either. 

Applying proactive HR results in better hires, increased productivity, less turnover, and higher levels of job satisfaction among your employees.

How to Improve Your HR Strategy

It shouldn’t come as a surprise that using a more proactive human resources approach will improve your HR strategy and businesses’ performance. But to make it easier to focus on proactive HR practices, you might need to hand off some of your tactical HR activities. 

To learn what activities you should let go of and how Obsidian HR can help, download this guide

Download Our eGuide: 7 HR Activities to Let Go of

Check out 7 HR activities to let go of to reclaim time while ensuring your business runs smoothly.

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