How To Develop an HR Strategy: A Comprehensive Guide

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Human resources (HR) is not just about overseeing the administration of pay and benefits—it’s also about strategy. HR strategies are plans that outline goals and objectives for an HR department and how the department can achieve them. 

In this post, we’ll guide you through what to focus on when developing an HR strategy to better serve your employee and organization.

Cutlural analysis

Developing your HR strategy should begin with an analysis of the company’s culture, past HR activities, and areas where you can make improvements. The HR department must understand its role within your organization by asking the following questions:

After you’ve analyzed the company’s culture and HR activities, look at why you need to make specific changes. What are some of the problems in your organization that HR can help solve? An HR manager uses this as input to prioritize and delegate tasks.

Where human resource management should focus its efforts will depend on your company’s goals and objectives, as well as the kind of employees it wants to attract for future positions. 

After HR has determined where to focus its efforts, the next step is to assess HR needs to achieve organizational goals. This includes department resources, capabilities, and decision rights. 

HR leaders should assess these needs with the assistance of employees from different departments to find out what they need to complete their tasks and achieve organizational goals.

How can strategic objectives be linked back to your organization’s HR strategy?

HR strategies should be linked back to your organization’s HR department, and HR staff can perform these activities to help make this a reality. HR needs will change depending on what your company wants to achieve and how it wants its business and employees to operate. 

This means that you should plan HR activities in ways that will help HR meet the company’s objectives. At the same time, these activities need to ensure that HR staff members can do their jobs successfully.

When managing human resources, you must think about what kind of organizational changes are made by HR. Is it done for the sake of HR needs, or is it to improve the company’s bottom line? 

The HR department can plan functions that will bring benefits for both HR and the organization—that is, HR goals, which you can achieve by linking HR strategy back to organizational goals.

How can a balanced scorecard be applied to human resources?

A balanced scorecard is a tool for strategic planning that measures HR metrics to determine the effectiveness of HR activities. It was developed by Robert Kaplan and David Norton, who wanted to apply nonfinancial measurements to business strategies—something they felt companies weren’t doing at the time.

A balanced scorecard keeps track of what HR is doing and measures its progress by looking at the department’s financial activities, customer-facing activities, internal business processes, and staff learning and growth. 

The balanced scorecard consists of two main sections: 

  1. Strategic intent. This section outlines the organization’s vision for HR in the future, as well as how HR will achieve its HR goals.
  2. Performance drivers. You can use this section to measure HR activities and HR progress, and to communicate the organization’s HR vision to employees.

Examples of successful HR strategies

Many companies have successful HR strategic plans, but the following companies and their plans stand out:

What does strategic HR look like when implemented in an organization?

When you implement HR successfully it can be a key driver in helping organizations achieve their goals.

HR needs to be able to work with other departments, and every department should have representation from HR so that all teams can understand how they can work together. HR strategies should show the benefits of HR activities to the department.

Another part of your strategy should be remuneration, which determines how employees get paid. Managers often pair this with a benefits package, which most employees appreciate. 

How do you determine which HR metrics to measure and report?

HR leaders can use certain metrics to measure the performance of certain HR activities, and the department should focus on the metrics that align with the organization’s strategy. The balanced scorecard is a great way of identifying the HR metrics that align with organizational goals.

How to get senior management buy-in for your HR strategy

Senior management buy-in is important for HR strategies, and HR leaders can achieve this buy-in by demonstrating how department activities align with organizational values.

Human resources should involve managers in developing HR strategies so that the managers can understand what is required from them in strategy execution. HR managers should also communicate the strategy to other departments.

How do you know if HR leaders are really listening to employees?

HR leaders should encourage department employees to provide feedback and suggestions for HR activities, as well as the strategies behind them. HR managers should regularly ask their teams about HR initiatives and communicate with other departments regarding department goals. 

HR managers should also be open to any feedback that employees provide and act on it accordingly. You’ll know if your leaders are paying attention and responding to employee needs based on your employee retention levels. 

How does a recent merger or acquisition impact your ability to get senior management buy-in?

A merger or acquisition will often present HR managers with new challenges. And the managers should first assess if HR activities are still relevant, as well as review the organization’s HR policies. HR managers should also conduct a needs assessment for the department in order to identify the necessary HR activities following a merger.

Next steps

Now you’re prepared to get your strategic hat on and help improve the human resource function in your organziation.

To help with execution thereafter, here’s our pick of the best HR software on the market today.

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