HR Strategy: How to Create an Effective HR Strategy? HR Strategy Examples + More! 

We’ve talked about people strategy and creating a strategic plan for your business before in this blog. And if you’re one of the great people who read that article, you should know that people strategy and HR strategy are not the same thing! How? It just isn’t!

Just kidding of course, we’re going to talk about the difference between them in a minute. But before diving into the definition and importance of HRM strategic planning, we have a beatiful and inspiring quote to get us started:

“HR professionals play three roles: storyteller, strategy interpreter, strategic facilitator.”

—Dave Ulrich, cofounder at The RBL Group

As Dave Ulrich states, you have the duty to set and implement the much needed human resources strategy as an HR professional. So if you want to learn how, let’s start!

Put Your Remote Employees First

We know trying to create the best strategy for your organization can be overwhelming. That’s why you need a tool that will help you along the way.

Teamflect can be your Swiss-army knife while deciding on your next steps of strategizing -just saying!

What is an HR strategy?

If we look at it in a practical way, an HR strategy is the plan an organization creates to govern their human capital to align with their vision, goals, objectives, key results and expectations. Creating an effective HR strategy is the job definition of a human resources department.

An effective HR strategy should include all aspects related to human resources from recruitment to compensation, training, and benefits. According to SHRM’s article titled Human Resource Strategy: Adapting to the Age of Globalization, we can analyze HR strategy in three parts:

• What employees offer: What does your employees offer? Skills, abilities, and competencies go here.
• What employees feel: What does your employees feel about their work? Are they motivated, committed, and engaged?
• What employees do: How productive are your employees? Analyze them depending on categories such as task behavior, attendence, turnover, etc.

As with all business-related strategies, an HR strategy is essential for the growth and success for your organization in the long run. It’s a way to use strategic HR planning as the catalyst for achieving your organizational goals.

Key elements of an HR strategy are:

• Talent acquisition
• Employee development
• Performance management
• Compensation and benefits
• Retention strategies
• Workforce planning
• HR technology
• Compliance and legal considerations
• Employee engagement and well-being
• Change management

Why is HR strategy important?

An HR strategy is a cornerstone of effective organizational management, serving as the blueprint for how your company manages its human capital to achieve its business objectives. Having a steady HR strategy can increase productivity and help you hire and retain best talent.

What is the importance of aligning HR practices with the strategic goals of your organization? HR strategies is a way to fix every facet of workforce management—from talent acquisition and development to performance evaluation and retention strategy.

HR Strategy vs. People Strategy

As we stated before, the difference between HR strategy and people strategy lies in their goals and scope. While an HR strategy primarily concentrates on the function of the HR department within an organization with a more tactical approach, people strategy takes a broader view and focuses on the organization’s entire workforce as a valuable asset.

HR strategy involves the key elements we mentioned such as talent acquisition, training and development, performance management, compensation and benefits, employee relations, and compliance with HR regulations.

People strategy is more focused on elements like talent management, leadership development, employee engagement, diversity and inclusion, succession planning, and organizational culture development.

It’s important to remember that HR and people strategies work hand-in-hand and we can’t separate them from each other in a well-structured organization.

How to develop an HR Strategy?

Now, let’s move on to the part we actually talk about how to create an effective HR strategy that will help your organization in the long run.

1. Understand your organizational goals

The first step of creating any business-related strategy should be understanding and aligning your strategical goals with organizational goals. If your strategy is not complimenting your organization’s mission, vision, and objectives, why do you even bother to develop one?

So that’s why you start by gaining a deep understanding of your organization’s overall business goals and objectives. You can meet with key stakeholders, such as senior leadership and department heads, to understand their vision for the company.

2. Evaluate your current strategy

If you’re not starting from scratch and already have an HR strategy in your hand, you better analyze and evaluate that strategy first. Conduct a thorough assessment of your current HR practices, policies, and procedures.

Conduct a SWOT analysis where you identify strengths, weaknesses, opportunities, and threats within the HR function of your organization. Decide what is working and what isn’t, and create a roadmap for necessary changes.

3. Re-define success and set clear objectives

The success of your strategy should depend on your definition of success. While an HR strategy can definitely increase productivity, boost engagement, and do much more, you should set clear objectives for your strategy.

What are you trying to achieve after implementing this strategy? And where will these objectives fit in your organization’s goals? Prioritize HR initiatives based on their impact on your goals. Decide which areas of HR, such as talent acquisition, employee development, or retention, need the most attention and set your goals.

4. Focus on talent management

One of the most important aspects of any successful HR strategy is to develop strategies for recruiting, hiring, and retaining top talent. You need those new hires that will help your organization thrive while keeping your most loyal and successful employees by your side.

Consider and create career pathing, workforce planning, succession planning, and talent development programs. Talent management is much more than just hiring the best candidate, it’s about retaining and developing them as leaders.

As Renee West, the director of HR consulting at Rea & Associates:

You can have the best strategy and the best building in the world, but if you don’t have the hearts and minds of the people who work with you, none of it comes to life.

5. Implement a performance measurement and feedback system

In the modern era of Internet, everything connects to automation. If you want to focus on the development of your strategy and forget about mundane tasks of HR such as documentation, task management, and preparing performance reviews, you need HR automation in your life!

Luckily, we have the best suggestion if you’re using Microsoft Teams as your main communication tool: Teamflect! Teamflect is the ultimate performance management/employee engagement software with seamless Microsoft Teams integration.

You can set and track goals, create objectives and key results, conduct performance reviews, collect feedback and survey data and analyze them without ever leaving Microsoft Teams. Think about how much time using Teamflect will save you!

Some other key features of Teamflect are:

• 360 feedback software
• Massive performance review template gallery (with customizable templates)
• Automated review cycles
• Customizable employee recognitions
• OKR management
• Feedback template gallery
• Assigning tasks through Teams chat
• Employee engagement surveys

6. Boost employee engagement and retention

As we mentioned in the 4th step, retaining your top talent and keeping them engaged should be one of your priorities when creating an HR strategy. Develop initiatives to improve employee engagement and retention.

You can consider conducting surveys, offering flexible work arrangements, and recognizing employee achievements. You can choose one of our selection of top employee engagement tools and use for tracking engagement rates.

7. Communicate the HR strategy to employees

We know, this is the most obvious step! After creating the framework of your strategy and deciding on your objectives and results, you should let your employees know. Communicate the HR strategy to all employees and make sure they understand their roles in achieving the HR objectives you’ve set.

Implementing an effective change management is one of many responsibilities of the HR department, and you need a plan to facilitate adoption for everyone in the organization.

Benefits of Having an HR Strategy 

1. Improves productivity

Having a steady HR strategy improves productivity with the clear roadmap it creates. When employees know where they fit in and possible development opportunities they can use, they feel more motivated to make a difference for your organization.

2. Speeds up recruitment

A clear HR strategy helps in attracting and retaining top talent. Since an effective strategy will outline how the organization plans to recruit, select, and develop employees, making it easier to identify and hire people who fit your company culture and contribute to its success.

3. Reduces costs

If you have a strategic approach to HR, you can optimize HR processes that will lead to cost savings in recruitment, training, and employee turnover. You can plan your budget and fit your strategy inside this budget, and not vice versa.

4. Creates a culture of empowerment

In an organization with a pre-defined HR strategy, we can see a culture of empowerment and positivity. With the people-oriented approach that comes with a healthy strategy, your employees feel more valued, encouraged to do more, and empowered more than ever.

5. Improves employee engagement and well-being

We can’t think of HR strategy and rule out employee engagement. HR strategies often include initiatives to boost employee engagement, and engaged employees tend to be more motivated, productive, and loyal to your organization.

6. Reduces employee turnover rate

Happy employees means low turnover rates. As your organization excels at its strategy, your employees will have no reason to leave your organization.

HR Strategic Planning Best Practices

Let’s say you’ve followed our steps and created an HR strategy. It doesn’t end there! You need some HR strategy best practices to help you along the way after the functioning of your strategy.

1. Know and track your budget

When you think without a budget restraining, you can come up with thousands of ideas and initiatives for your strategy. But what’s important is to find and implement the ones that fit in your department’s budget.

It’s easy to get carried away when creating an HR strategy, so make sure to meet with your finance department and create a budget roadmap to use in the implementation.

2. Set measurable goals and KPIs

Another category that can become a hassle easily is the goals and KPIs you set during your strategy. Of course you can think that you’ll boost employee engagement rates by 100% and increase retention by 1500%.

But life doesn’t work like that. You need specific, measurable and realistic goals that you can achieve with facing a little challenge on the way. Make sure you also set key results for your objectives to track the progress of your strategy in the long run.

3. Review and adjust regularly

You can’t just create the strategy and forget about it later. You need to review, re-evaluate and adjust your HR strategy regularly for it to become effective. In the modern business-world, everything changes in a heartbeat, so you’ll definitely need to adjust the strategy as you go.

4. Address HR-related risks

Addressing HR-related risks is essential for you to maintain a compliant, productive, and engaged workforce while minimizing legal and financial liabilities. You won’t believe how many risks can come up when you think about it! So, we recommend being prepared for the worst and letting your strategy do the rest.

Mistakes to Avoid While Creating Your HR strategy  

1. Ignoring stakeholders

Although you’ll think about your employees when you hear the word “HR strategy”, it concerns the whole organization. If you fail to involve key stakeholders, including senior management and department leaders, in the HR strategy development process, it can result in a lack of buy-in and support.

Make sure you’re on the same page with the managers, leaders, and C-levels for a healthy implementation.

2. Not conducting a SWOT analysis

Skipping a comprehensive analysis of the organization’s current HR capabilities and considering external factors will lead to missed opportunities for improvement. Make sure you know exactly where you are at the beginning to track progress and create a framework.

3. Neglecting data and analytics

Data and analytics is the backbone of any strategy. If you’re not collecting data to evaluate the effects of your strategy, how will you know if it’s working or not? You should use data to detect any trends, measure the impact of the strategy, and make adjustments and decisions accordingly.

4. Ignoring employee feedback

We don’t even know what to say about this. If you’re ignoring the input of your employees, the biggest component of your strategy, why do you even have one? Neglecting to seek and act on employee feedback will cause a lack of understanding of employee needs and concerns, and make your strategy ineffective.

HR Strategy Examples 

1. Dell’s HR Strategy

As one of the industry giants in technology, Dell adopts an effective, sturdy and classic HR strategy. In the case study of SHRM where they analyzed HR strategies of different successful companies, we can see that Dell uses a strategy consisting of 6 steps.

1. Recruitment

The first question of Dell’s strategy is asking where to find the people that will take Dell forward? How do you find these people and hire them?

2. Selection

After you find the best fits for your organization, you need to choose the best one among them. In this step, Dell asks the question of “What skills do they need and how can we assess those skills?”

3. Rewards

You can’t attract and hold new talent without being competitive. Dell knows that and keeps up with the industry by asking what is the market pay rate and what types of incentives will attract and motivate these employees.

4. Training and development

You’ve find the candidate that will fit perfectly to your organization. But the matter of training and development should be always on the table. Dell’s HR strategy includes answering what skills do they need trained and how do we orient them to Dell.

5. Performance management

Another point of interest in Dell’s strategy is evaluating performance and metrics they will need. What competencies and outcomes should be evaluated?

6. Information/Participation

You need transparency alongside with security in a healthy organization. Dell decides what information to be shared with their empoyees and in what areas they should participate.

2. Google’s HR Strategy

Google’s transformation of its HR policies and procedures serves as an exemplary case study in crafting an effective HR strategy. The tech giant recognized the need for change, as traditional HR practices were no longer keeping up with the evolving workforce dynamics. Google’s HR strategy consists of four main points:

1. Data-Driven Decision-Making

Google introduced “People Analytics,” a data-driven approach that empowered HR professionals to proactively address organizational challenges. Google uses this innovation to streamline their recruitment processes, identify top-performing employees, and boost their performance review systems.

2. Psychological Safety

Google is all about creating a culture of psychological safety, encouraging employees to take risks, share ideas, and learn from mistakes without fear of repercussions. In Google, they believe that the best talent shows itself in a culture of trust that promotes innovation and creativity.

3. Employee Well-Being

Google’s HR strategy prioritizes employee well-being by implementing various programs, including on-site fitness centers, healthy dining options, and mindfulness and meditation classes.

4. Transparency and Communication

Google emphasizes transparency and communication in its HR practices. Employees have access to comprehensive information about company policies, procedures, and initiatives.

Regular feedback and idea-sharing opportunities creates a sense of trust and mutual respect between employees and management.

Conclusion

In conclusion, creating an effective HR strategy is hard work. Real hard work. But by following our tips and suggestions, you can find the best strategy tailored for your organization.

Don’t forget to take your time and value feedback in your strategy. Also, if you need a tool that will carry the weight of boring tasks, why don’t you…

Frequently Asked Questions

1. What are strategic human resources functions?

Strategic human resources functions can be listed as:

• workforce planning
• talent acquisition and recruitment
• training and development
• performance management
• succession planning
• employee engagement and retention
• compensation and benefits
• DEI initiatives

2. What are four human resource strategies?

As we mentioned before, four human resource strategy examples are:

• Talent Acquisition Strategy: Attracting and hiring the right talent through effective recruitment, sourcing, selection, and onboarding.
• Employee Development and Training Strategy: Boosting employee skills and knowledge through training, career development, and performance management.
• Compensation and Benefits Strategy: Designing competitive and fair compensation packages to attract and retain employees.
• Employee Engagement and Retention Strategy: Creating a positive workplace culture and implementing retention initiatives to keep valuable employees.

3. What are the types of HR strategy?

We can divide HR strategy into two categories: more general strategies related to company-wise goals, and more specific strategies that will help the HR department achieving its objectives.