Work-Life Referral Program

Improve HR Decision-Making With A SWOT Analysis

According to the U.S. Bureau of Labor Statistics, an estimated 4.5 million people voluntarily left their jobs in November 2021. That’s a record number.

In this topsy-turvy labor market, many employers are under greater pressure to make optimal human resources (HR) decisions. Having a sound, dependable, and growth-oriented HR function can help you retain good workers, draw strong job candidates, and increase employee engagement.

One way to improve decision-making in HR is to use a strengths, weaknesses, opportunities, and threats (SWOT) analysis.

Core Competencies
Generally, the purpose of a SWOT analysis is to pinpoint internal strengths and weaknesses that affect operational performance. Strengths are typically competitive advantages or core competencies that generate value, such as a strong sales force or exceptional quality of products or services.

Conversely, weaknesses are factors that limit an organization’s performance. These are often revealed in comparison with competitors. Examples include a negative brand image because of a recent controversy or an inferior reputation for customer service.

However, you can apply a SWOT analysis to more specific aspects of your operations — including HR. Think about your HR department’s core competencies, such as:

  • Filling open positions
  • Administering benefits
  • Supporting employees with specific needs or those in crisis

What does it do well and what does it need to improve on?

Outside Factors
The next step in a typical SWOT analysis is identifying opportunities and threats. Opportunities are favorable external conditions that could generate a worthwhile return if the organization acts on them. Threats are external factors that could inhibit operational performance or undermine strategic goals.

When differentiating strengths from opportunities, or weaknesses from threats, ask yourself whether an issue would exist if your organization didn’t. If the answer is yes, the issue is external and, therefore, an opportunity or threat. Examples include changes in demographics or government regulations.

Specific Uses
Your organization can benefit from applying a SWOT analysis to its HR function in a wide variety of ways. It all depends on the specific factors you identify.

Let’s say you determine, by benchmarking yourself against similar organizations, that ‘time to hire’ is a strength. This typically means that your HR staff is skilled at placing targeted, effectively worded ads; working well with recruiters; and interacting in a timely, efficient and positive manner with applicants.

In today’s environment, a strong hiring mechanism is undoubtedly a competitive advantage. If hiring is a weakness, however, you could be headed toward an employment crisis if you lose too many employees — particularly coupled with widespread absences because of the ongoing pandemic.

Opportunities and threats are important from an HR perspective as well. For example, if your organization decides to strengthen employee retention through expanded benefits, you’ll need to discuss the opportunities (and challenges) this will pose to your HR staff. By investing in their training and upskilling, you can strengthen HR competencies while providing a better benefits package to employees.

And there are plenty external threats to consider. An aggressive competitor may begin poaching your employees, putting added stress on your HR department. Evolving tax regulations and compliance requirements for health and retirement benefits also can catch HR staffs off-guard and put an employer in a precarious position. Watch out for regulatory changes in your industry.

Easily Overlooked
HR departments typically don’t generate revenue, so they’re easy to overlook when undertaking strategic planning. That can hurt an organization if internal weaknesses and external threats undermine its reputation as an employer. And, of course, leveraging strengths and opportunities in any area is a good idea. Ultimately, a SWOT analysis can help you support your HR staff, just as they’re supporting your organization’s mission.

Related Articles

Talk with the pros

Our CPAs and advisors are a great resource if you’re ready to learn even more.