From Paper Pusher to Power Player: The Importance of Transactional HR & Strategic HR

According to the real estate developer Steve Wynne, “Human resources isn’t a thing we do, it’s the thing that runs our business.” If that sentiment is true in real estate, then it’s even more relevant in other industries. But how exactly would you define the role of HR at your company? 

HR is a blanket term that applies to every aspect of a business and the people who work there. There is much to do that is related to HR—from everyday processes to major HR initiatives. There’s a huge difference between the big picture goals of Strategic HR and the more practical duties and routine paperwork of transactional HR. 

What is transactional HR?

Every end of year, quarter, and pay period, HR staff performs necessary paperwork to keep the business operational. Accurate recordkeeping is required for compliance, but schedules and payroll are also basic parts of running a business with employees. Here are a few examples of transactional HR tasks:

• Recruiting and Onboarding
• Payroll and Benefits Administration
• Training and Skill Gaps
• Exit Interviews and COBRA coverage

What is strategic HR? 

In their help wanted ads and values statements, plenty of employers talk about treating workers “like family,” but strategic HR is where they can really invest in employee wellbeing. With a strategic mindset, HR staff can support employee development and boost retention for the long term. Strategic HR focuses on big picture goals:

• Productivity and team building
• Career growth and leadership development
• Engagement and retention
• Community involvement and branding

Choose one or the other? Or do you need both?

Obviously, you need both transactional and strategic sides of HR to fully serve your workforce. HR departments can’t ignore their transactional responsibilities. Payroll and compliance remain necessary, but those essentials shouldn’t eclipse the big picture, strategic goals. Automation with HR software provides detailed reporting and insights for broader, strategic initiatives. 

Embracing the Strategic Mindset

Consider the long term impact of today’s choices. Each hiring decision has lasting consequences, good or bad. Don’t get tunnel vision with necessary, transactional routines. Keep your head in the game to achieve strategic HR goals.

• Embrace the Mission and Strategy: Remember the objectives of strategic HR, whatever you choose to target first. Whether you’re boosting internal talent mobility or fighting to improve retention, you’ll need to commit to a strategy designed for that mission.  

• Manage Compliance and Risk: Transactional HR always comes first, maintaining compliance and keeping the business running smoothly. Strategic HR requires time and investment, but it shouldn’t become a burdensome expense or liability. 

• Align HR Services with Business Objectives: You can advocate for employee well-being while still emphasizing ROI for the business. When appropriate, look beyond employee surveys to quantitative metrics like turnover and recruiting costs. 

Nurturing Talent and Leadership Development

Today’s employees will shape the future of your business. Simply by managing personnel decisions, HR steers the whole company toward success or failure.

• Recruiting & Hiring: Does your hiring strategy begin and end with filling current job openings? Even recruiting for seasonal roles can identify and develop talent for future growth.

• Drive Engagement, Productivity, & Retention: Company culture is more than a corporate buzzword. Motivate workers for higher engagement and reduced turnover.

• Designing Training and Development Opportunities: Get a head start with remote onboarding, but don’t limit your training to new hires. Use upskilling and cross training to develop a more resilient workforce.

• Continuous Learning: Inspire employees by promoting meaningful learning. Bring a totally new approach to office training without making things as awkward as Michael Scott.

Championing Organizational Culture

Several aspects of strategic HR have a synergistic effect on company culture. When employees feel valued and respected, the whole atmosphere is more collaborative.

• Foster a Positive and Productive Work Culture: Use HR strategies to combat a toxic work culture. Most employees want to be reasonably productive, so HR can help ensure that everyone has access to the training and resources they need.

Embracing Technology and Data Analytics

The era of AI innovation in HR promises to deliver revolutionary changes. It was hard for smaller and medium-sized businesses to take full advantage of “big data” tech, but powerful analysis is more accessible with AI-powered tools.

• Analyze Workforce Data: The best HR software provides an unprecedented level of detailed reporting. You can identify bottlenecks and track the impact of policy changes in real time. AI provides a powerful way to cull and organize huge amounts of information.

• Identify Workforce Trends: What do your highest (or lowest) performing employees have in common? Are seasonal trends contributing to staffing shortages or lulls in productivity? Get new insights with HR software that accesses your integrated systems.

Make Informed Decisions: We’re not asking you to let the software make HR decisions for you. Like a warning light or temperature gauge on a car dashboard, HR software identifies hidden problems before they cause visible breakdowns. Detailed reporting (and early warning) allows human leadership to decide how to respond.

Discover how Netchex can help your company with both Transaction HR and Strategic HR goals: