In today’s competitive talent market, the need for a coherent HR strategy has never been greater.
Here we’ll cover what an HR strategy is and how you can develop one.
Understanding HR Strategy: A Primer
What is an HR Strategy?
Simply put, your HR strategy is your plan for helping the organization meet its strategic goals through effective talent management. This covers:
- Setting goals and priorities
- Determining actions to achieve the goals
- Mobilizing resources to execute the actions
- Periodically reviewing and adjusting accordingly.
Why is an HR strategy important?
Having an HR strategy is important because it will:
- Align HR goals with business goals
- Ensure recourses are effectively utilized
- Ensure the necessary HR software is in place
- Create accountability and enhance the department’s reputation.
How HR strategy aligns with business goals
The HR strategy is developed with one aim in mind: to help ensure the continued success of the organization.
True strategic alignment means:
- Close collaboration with management
- Understanding the business model
- Understanding the business strategy
- Analyzing data from other business units
- Collecting employee feedback
- Professional development in business acumen
- Utilizing people analytics
- Strategic workforce planning.
Of course, HR will help identify and prioritize business goals too, so the process is self-reciprocating.
Key Components Of A Successful HR Strategy
The strategy will likely encompass initiatives driving recruitment, talent development, engagement and retention, performance management, company culture, DEI, and wellness and wellbeing.
An effective workforce planning process helps align talent with business goals and objectives.
- Analyze current workforce: Identify skills gaps and anticipate future needs
- Assess supply: Assess the current supply of talent internally and externally
- Develop roadmap: Develop a roadmap of strategies to plug skills gaps.
Helping to bring on new talent is a crucial HR function and business function, so this will undoubtedly form a key part of the overall strategy.
- Monitoring the talent market and keeping up-to-date with the latest trends
- Developing effective recruitment strategies utilizing industry best practices and the latest recruitment software
- Candidate experience based on the candidate's journey from job posting to onboarding
- Building a strong EVP and employer brand.
Employee retention and engagement
It’s more cost-effective to retain talent than source it from the market, so retaining employees and ensuring they’re engaged is another core component of the overall strategy.
- Cultivating company culture: Building a culture that aligns with business values and employee expectations.
- Employee well-being programs: Implementing initiatives that focus on mental health, work-life balance, and overall employee well-being.
- Developing effective recognition programs to celebrate achievements, encourage desired behaviors, and motivate employees.
- Career development opportunities: Facilitating continuous learning and growth opportunities to retain top talent.
Learning and development
Closely aligned with retention, learning and development (L&D) is a key component of any HR strategy.
- Business needs: What skills and knowledge does business need now and in the future?
- Skills assessment: How competent is the current workforce, are there any gaps in skills or knowledge?
- Developing L&D initiatives: Developing training programs and initiatives that are closely aligned with the needs of the business as well as worker preferences.
Notoriously tricky to get right, performance management covers:
- Goal setting and alignment: Establishing a clear measurable goal-setting system aligned with organizational objectives.
- Continuous feedback and evaluation: Implementing regular performance reviews and feedback mechanisms.
- Data-driven decision making: Leveraging HR analytics to inform performance-related decisions and improvements.
- Addressing underperformance: Strategies for identifying and managing underperformance in a constructive manner.
Adapting to hybrid/remote/flexible working models
Modern workers value flexibility and those that don’t adapt will find it more difficult in the talent marketplace.
- Implementing flexible work policies: Developing guidelines that support remote and hybrid work environments.
- Technology integration: Deploying the best internal communication software and best practices to facilitate effective communication and collaboration in a remote setting.
- Maintaining engagement and productivity: developing inititiatives to ensure remote employees are engaged and productive.
- Remote work training and resources: Providing necessary training and resources to employees and managers for effective remote work.
Collecting and analyzing employee feedback will help inform the strategy alongside business goals.
- Surveys: pulse, engagement, and annual/bi-annual surveys
- Skip-level meetings: conducted between a senior manager and someone under their direct report
- Stay interviews: annually or as needed
- Exit interviews: to understand why someone is leaving and what could have made them stay
- Feedback culture: nurturing a culture where employees feel safe to raise concerns and suggest ideas.
How To Create An HR Strategy
Creating a human resources strategy is a comprehensive process that aligns the human resources function with the overall strategic objectives of the organization.
Here's a step-by-step guide to developing an effective HR strategy:
1. Understand organizational goals
- Assess business objectives: Begin by understanding the long-term goals and strategic direction of the organization. What are the key business priorities and objectives?
2. Understand workforce needs
- Employee feedback: Gather insights from employees about their experiences, needs, and suggestions. This can be done through surveys, interviews, and focus groups.
- Workforce analysis: Assess the current workforce in terms of skills, demographics, and potential future needs. Identify areas where upskilling, reskilling, or hiring may be necessary.
3. Develop HR objectives
- Set clear objectives: Based on the business goals and HR audit, set specific, measurable, achievable, relevant, and time-bound objectives for the HR function.
- Performance indicators: Establish metrics and key performance indicators (KPIs) to measure the effectiveness of HR strategies. These could include employee turnover rates, training effectiveness, employee engagement scores, and time-to-hire.
4. Conduct an HR audit
- Current state analysis: Evaluate the current HR capabilities, processes, and practices. This includes staffing, recruitment, training and development, employee engagement, performance management, and compliance.
- Identify gaps: Determine where gaps exist between the current HR capabilities and what is required to achieve the organizational goals.
5. Strategize and plan
- Action plans: Develop strategies and action plans to meet each HR objective. This may include talent acquisition and retention strategies, training and development programs, diversity and inclusion initiatives, and employee wellness programs.
- Resource allocation: Determine the resources required to implement these strategies, including budget, technology, and personnel.
- Leverage HR tech: Consider how technology, such as HRIS (Human Resource Information Systems), can streamline HR processes, improve data analytics, and enhance employee experiences.
6. Communication and getting buy-in
- Stakeholder engagement: Communicate the HR strategy to relevant stakeholders, including management and employees, to ensure buy-in and understanding.
- Feedback mechanisms: Establish channels for ongoing feedback to keep the strategy responsive and adaptive to changing needs.
- Roll-out: Implement the HR strategies and plans, ensuring that there is clear communication about changes and new initiatives.
8. Monitor and adjust
- Continuous review: Regularly review the outcomes of HR initiatives against the goals and KPIs
- Adapt and evolve: Be prepared to adjust the strategy in response to changing business needs, workforce dynamics, and feedback.
By following these steps, you can create an HR strategy that not only supports your organization's goals but also enhances the overall employee experience, leading to a more engaged and productive workforce.
HR Strategy Examples
Hiring in competitive markets
The competition for top talent is high, especially in the tech and consulting fields.
To hire the talent they need, organizations put a great deal of resources into building strong employer brands and exemplary recruitment and onboarding experiences.
An example of this is Boston Consulting Group’s (BCG) BCGYou App. The app acts as a personalized guide for each candidate, helping them prepare for interviews and get insights into working life.
This high-tech approach showcases BCG as a modern employer that values candidates. It also helps streamline their hiring process by keeping candidates engaged and providing them with the resources they’ll need.
Retaining top talent
It’s generally more cost-effective to keep talent than recruit from the market, so employee retention will undoubtedly form a significant part of your HR strategy.
An effective way to improve employee retention is by offering career development opportunities.
Verizon used feedback from their employee surveys to launch their Talent GPS platform, a microsite that contains a library of all job roles available at Verizon and career journey planner.
It’s easy to see how a tool such as this will improve internal mobility and retain talent who might otherwise search for new opportunities elsewhere.
Tips To Become A More Strategic Partner
According to HR leader Alex Link, this is what to work on in order for HR to become a strategic partner.
Understand the business
I.e. gain an understanding of the business model and the work your colleagues do.
- Gain exposure to different business areas
- Listen to earnings calls
- Tap into your internal network
- Attend strategy meetings.
Remove transactional tasks
There are only so many hours in a day, so to make time for strategy it’s necessary to reduce transactional tasks.
There are two ways to approach this:
- Change your HR operating model to prioritize the use of technology to augment HR capabilities and redirect HR personnel to better focus on strategic imperatives.
- Protect your time and prioritize effectively using techniques such as the Eisenhower Matrix.
Become competent using data
“Being a shepherd of this data to your business teams is critical—you need to be able to collect the relevant data, analyze it, and take a data-driven approach to inform both HR strategy and business strategies and initiatives.” - Alex Link
Build strategic skills and capabilities
Seek out mentorship and coaching and seek out hands-on strategic experiences that stretch your strategic capabilities. Some competencies to work on:
- Business acumen
- HR acumen
- Strategic thinking
- Relationship building
- Change management
- Market analysis
- Goal setting/road mapping
HR As A Strategic Partner
It will become much easier for HR to work strategically if it’s viewed as a strategic partner by the wider business.
Luckily, the steps outlined above: getting to know the business, tying HR goals with business goals, and using data, will increase the standing of the department and earn you a ‘seat at the table’.
Don’t be afraid to start small, collect feedback, and keep adapting to ensure you’re continuing to meet the needs of the business.
You can get further support developing your HR strategy—join the People Managing People Community, a supportive community of HR and business professionals sharing knowledge to help you progress in your career and make greater impact in your org.