HR Leaders

Strategic HR vs Compliance HR: What’s the Difference?

Compliance has traditionally been HR’s main focus and area of responsibility. HR is expected to ensure the company meets all legalities concerning employee treatment while making sure employees understand workplace handbooks, codes of contact, and similar issues. Compliance HR continues to have its place in modern human resources, but growing access to employee data has seen the rise of strategic HR and the alignment between human resources and company goals.

READ MORE: How Snag Tackled Employee Engagement

Defining Compliance HR

Compliance HR has two main goals: to ensure the employer treats employees fairly and to prevent the business from running afoul of legal repercussions. Compliance HR is the nexus for company involvement with:

  • Title VII of the Civil Rights Act of 1964
  • The Americans with Disabilities Act
  • The Age Discrimination in Employment Act
  • Title II of the Genetic Information Nondiscrimination Act
  • The Uniformed Services Employment and Reemployment Rights Act
  • The Fair Labor Standards Act
  • The Family and Medical Leave Act
  • The Occupational Health and Safety Act
  • Immigration law
  • Benefits and pensions
  • Union Laws

Make no mistake—compliance HR fulfills an important role and will continue to do so. The rise of new, data-driven technology is opening new opportunities for HR, however, and a chance to leverage HR talent and data to improve business goals and outcomes.

Compliance HR is preventative and reactive in nature.

Strategic HR

Strategic HR is very different from compliance HR. Compliance HR is preventative and reactive in nature–problems are prevented or addressed by ensuring compliance with legal regulations and company policies. Strategic HR, in contrast, looks for opportunities to contribute to business goals. Human resource strategies and talent management no longer simply support business strategies–they help guide it.

Moving from compliance-based HR to strategic HR is a complicated endeavor that requires forming partnerships with other departments and C-suite executives. The following tips help you determine if your HR department is ready to make the move to strategic HR, and how to earn a place at your company’s decision-making table.

How Are You Positioned?

Before launching a campaign to strengthen strategic HR skills, it’s important to examine where your department stands right now. Are you only working with compliance HR, or does the department already have aspects of a strategically-based system? Compliance HR tends to use limited automated technology, relying at best on spreadsheets. Compliance-based HR usually reports to operations or finance, while managers of other departments handle their own recruiting, onboarding, and performance management.

In contrast, strategic HR heads are seen as partners rather than support staff by other managers. The strategic HR head often reports directly to the CEO, and HR strategies are tied to business goals. Data guides all HR decisions and recommendations, and automation performs a significant portion of talent management functions.

Understanding where your department currently sits in terms of compliance and strategy helps chart a course to increase strategic influence.

Identify Strategic Priorities

If you’re used to compliance HR you may not have a complete understanding of your business initiatives and goals. A move into strategic HR cannot take place without intimate knowledge of company initiatives, goals, and long-term strategies. Without this knowledge, you cannot identify which business drivers need HR support.

Talk to your C-suite executives about the company business plan, and the skills the company needs to meet its goals. Where does the business’s strategic plan place the company in five years, and what talents are needed to reach this milestone? Can you provide management with data that supports the business plan? Are current HR strategies aligned with company views on recruiting, onboarding, retention, and performance management? Consider your existing technology as well: do you have the tech you need to successfully support business strategies?

Know Your Talent Risks

With the company goals in mind, consider your own talent. Do you have the talent necessary to initiate strategies? Succession gaps between where you are and where you want to be will need to be filled before HR can meaningfully impact business strategy.

Technology Integration

As with talent, a move to strategic HR requires improved technology in order to provide the data that drives business decisions. Talent management technology increases employee engagement while providing a forum for succession planning, feedback, and performance reviews.

Seek Feedback

No business strategy moves from conception to completion without changing and evolving. This is as true of strategic HR as anything else. Seek regular feedback from executives, managers, and employees to ensure your’re providing the data and information needed to pursue business goals. Regular meetings with your executive team help fine-tune how HR creates value while providing an opportunity to discuss the processes, talent, and technology needed to move from compliance HR to a robust, influential and strategic HR department.

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