Your 6 Step Guide To Creating An HR Strategy
What makes a business work? You’re probably thinking it’s clients, its processes, but the real answer is its team. That is its people, its talents. To manage and attract talents, you need a human resources (HR) department. But a department can’t function without a strategy, an HR strategy.
The HR department isn’t just responsible for talent management and acquisition. It’s also in charge of building up and training those who already work for your company, managing their relationship with the business, among other things.
The HR department is at the heart of the work-government-employee triangle.
But if your HR personnel don’t follow a strategy, the entire company will suffer.
In this article, we’re going to talk about what the HR strategy is and why businesses need it. We’ll also offer tips on how to create an effective strategy.
What is an HR Strategy?
An HR strategy is a plan that not only supports the HR department within a company, but also supports the entire business, its development, and its functions.
The HR department is responsible for creating the hierarchy within your company. Titles, grades, job descriptions, career development and progression, all fall within the HR department’s roles.
That’s in addition to hiring, payroll, manpower planning, and conflict resolution, among other things.
Here’s another definition of what an HR strategy is:
It’s “a system of human resource practices for a particular job or collection of jobs aimed at the best employee performance possible to meet the firm’s ultimate goals,” explains Dr. Patrick M. Wright in a report published by the Society for Human Resource Management (SHRM).
But if there is no system or plan in place to guide your HR department, your entire entity will be at the mercy of luck and coincidence.
Because having good people who are enthusiastic, hardworking, ambitious, and good at what they do, isn’t enough.
You need a plan in place to support them, drive them forward, and help them grow. That’s what an HR strategy does.
But many companies aren’t aware what an HR strategy is or that they need one. They assume that simply hiring an HR generalist or payroll specialist will make up for everything.
Hint: It won’t – especially in the long term.
Why an HR strategy is important?
A human resources strategy ensures that the role of the HR department isn’t just administrative anymore.
Instead, “it uses management practices methods to integrate within the full company strategy, meshing with company policies and goals for long term sustainability and support of great organizational culture,” explains People Managing People.
Having a clear human resources strategy will set how the overall HR process operates. The strategy will ensure that the HR department is able to support the organization’s needs and its ability to achieve its goals.
An HR strategy takes all the above-mentioned responsibilities and ensures that both HR and the entire company meet the mission, vision, and goals established by the company’s management.
He goes on to explain that different companies have a different set of criteria for management, hiring, training and so on.
“Few firms manage their clerical workers the same way they manage their senior executives. Each group is recruited differently, is selected according to different criteria, attends different training programs and is paid differently. If your company is focused on customer service, you’ll need to build customer service skills and behaviors into all customer-oriented jobs, but your specific strategy of recruitment, selection, training, and rewards for a cashier will be different from those of a store manager,” he explains.
Meanwhile, director of HR consultancy Cedar International Louise Allen says in an article on Personnel Today that:
“A well-defined strategy clarifies the role of the HR team. It determines the size, structure and cost of the resource required to deliver it and ensures that all HR activity is aligned to business needs.”
What good HR strategies have in common?
There are 3 main criteria that set human resources strategies apart.
In his report, Dr. Wright explains that the best HR strategies are about “getting the best performance from your employees.”
He adds that a good HR strategy will work on 3 levels that get the employee to:
- Get something (such as training programs, skills, abilities)
- Feel something (such as motivation, commitment, loyalty, engagement)
- Do something (such as be productive, serve customers, stay with the company for a long period of time,…etc.)
By including these 3 criteria at the heart of your HR strategy, you’ll be able to serve the employees working for you, the employees joining your company, and the company’s management.
You’ll help your company fulfil its growth objectives.
HR Strategy Benefits
We’ve discussed the role of human resources within your company. Now, we’re going to explain why you need the HR strategy and then how to make it work for you.
1. Understanding and forecasting talent needs
The recruitment process isn’t merely about hiring someone today, tomorrow, or over the course of a year. It’s about taking a step forward and forecasting what type of talents the company will need in the future so it can grow and flourish.
This also includes making forecasts about your current employees’ needs to grow so they can support your company’s growth.
“If you know how many staff you require to achieve the future strategic goals of the business and what jobs need to be filled, you can get an early start on finding the right talent,” explains Australia-based Employment Hero.
2. Saving time and costs for paperwork
Since many of the HR department’s roles involve ‘administration work,’ there’s lots of paperwork involved.
By creating an effective HR strategy, you can manage and save time on payroll, employee onboarding, data management, and performance management.
A human resources strategy can help see any possible employment or compliance gaps and fill them.
3. Making employees happy and productive
It’s no secret that happy employees are likely to work harder and offer more when they’re appreciated. An HR strategy can help boost employee satisfaction within your company.
That’s why it’s important to understand your employees’ needs and struggles and work on helping them flourish within your company. This, in turn, will translate into higher morale, self-esteem, and appreciation within the company.
Happy employees can act as brand ambassadors, creating a positive image for your company, while also maintaining productivity.
4. Employee retention
Another thing is that happy employees don’t feel the need to leave a company where they are comfortable.
By having an effective HR strategy, you’ll be able to retain employees and reduce turnover.
You can do that by creating recognition programs and schemes as well as career development paths that help your employees rise within the company.
“If your HR practices are correctly designed and put in place, you’ll get the best employee performance, which means you’ll get the best overall company performance as well,” stresses SHRM’s Dr. Wright.
5. Improve and grow
To grow, you need to create a set of key performance indicators (KPIs) and measure them. KPIs form an essential part of your HR strategy.
The KPIs will help you understand what’s working for you and what isn’t. Maybe a KPI shows high productivity but no improvement in the overall business. This means you need to look at productivity in this field or aspect differently and change the way you measure its success.
KPIs to consider can include employee turnover, the process and speed of filling open positions, employee and manager conflicts, along with the level of satisfaction and dissatisfaction within the company.
Remember: The HR strategy is implemented by the HR department but supports the entire company.
How to develop an HR Strategy
To create a human resources strategy, there are several points that come into play. Let’s tackle each of them in brief.
Business and HR need to be on the same page
To create an effective HR strategy, both the business’s goals and the HR department need to be aligned.
In many cases, the HR department is unable to fully comprehend what the other departments within the company do and is therefore unable to support them in achieving their goals.
This stems from the unclear roles and goals presented by the business owner on one hand, and by the fact that HR functions are often limited to hiring and payroll without having to go into business details.
However, if the HR department doesn’t understand the business and its needs, it will never be able to create an HR strategy, let alone an effective one.
Hence, management and HR need to be on the same page.
Once management and HR are able to understand each other and collaborate better, it’ll be easy to navigate this alignment and create a clear and applicable HR strategy.
Understand your industry
An HR strategy not only differs from one company to another but also from one industry to another. The reason? Because the workforce and processes change too.
What works in one industry won’t work in the other. The way the HR department hires and trains employees in an oil company will be entirely different from a company that hires and trains store managers or cashiers or translators or lawyers.
Understanding how each industry functions, your company’s needs, and how it operates within that industry is a crucial step in the way you look at and handle your strategy.
Establish an organizational performance process
Part of creating a strategy for the HR department and the company as a whole involves understanding and executing organizational performance.
Organizational performance is when business goals are managed across the entire organization both vertically and horizontally. That is a process managed across managers and subordinates.
This organizational performance is divided into 3 main parts or sub-processes:
Performance management process
The HR department will need to create a performance management process to define the objectives for all staff within the company.
Developing a performance management process “is an opportunity to develop line managers’ skills in being able to disseminate and set stretch targets for their business,” notes HR consultant Louise Allen.
Performance review process
The second, and critical, part of the organizational performance process is the performance review process.
This process should be built on feedback based on achievements (or failures).
The personal development review process
The final part is the personal development review process. This process focuses on the individual employee’s strengths and weaknesses, how the employee uses and improves them to meet the organization’s development needs.
Unlike the performance review process, the personal development review process is about the employees themselves rather than their achievements within the company.
Creating organizational design
When you have a company, you need to design its overall organization to meet its business and customers’ needs.
Organization design “reflects the management processes that drive the business model and determines organizational agility and flexibility. These processes can be a source of competitive advantage or sources of frustration, unnecessarily absorbing time, cost and resources,” adds Allen.
As experts in ‘human resources,’ the HR department should look at potential structural weaknesses and use them to rebuild or revamp the parts of the company that need to be better structured.
For example, a company that has employees doing obsolete jobs should see its HR department do one of three things. 1) Find better jobs for these people, 2) Cancel jobs that are no longer needed 3) Build these employees’ skills so they can perform more important jobs that help the business.
Use resources strategically
As its name suggests, human resources is about human capital, the resources a company uses to build itself and present its work to the world.
A company needs to be clear about its “resourcing strategies,” notes Allen, adding that these strategies involve several “critical components.”
Your resourcing strategy can include “processes needed to determine resourcing needs, the processes to attract the right people and the processes for assessing and selecting the right people,” Allen explains. She stresses that the HR department plays a role in all of those components.
Look at benefits and compensation
The way your HR department handles compensation and benefits, or what is sometimes known as employee rewards or rewards strategy, is part of your HR strategy.
Compensation and benefits aren’t merely paying your employee at the end of the month. It’s that part of the strategy that offers motivation and incentivizes employees in your company.
The compensation and benefits scheme includes the basic pay in addition to one or more of these: bonuses, share options, profit-sharing, other incentives.
“There is evidence that organizations see compensation as a strategic management lever and are increasingly experimenting with new practices – team bonuses, for example, aimed at improving team performance or skills/behavior payments to upskill the workforce or reinforce culture or behaviour change,” notes Louise Allen.
Outsourcing your HR Strategy
But what if your business is small or you just have one HR generalist working for you? Or maybe you have too much work on your hands and not enough time or expertise to create a strategy.
Which begs the question: Can you outsource your HR strategy?
The simple answer is: Yes.
HR and recruitment companies, like Tawzef, offer an easy way out by diving into your business and creating your HR strategy for you.
It’s not a one-day or even one-meeting job. As you can see, the human resources strategy not only focuses on your human capital but also on how your organization functions and operates.
In addition to creating the strategy, Tawzef offers you a number of KPIs to measure to help you determine how well you’re implementing the strategy, what needs to change, and how to build on that strategy.
Creating and implementing an HR strategy is about teamwork. It’s more or less the same teamwork you need to help your company grow and remain operational for years and decades.
Moreover, managing people isn’t easy, especially as your company grows bigger, expands to new business industries, and looks to the future and how it can grow and be sustainable.
But using a proactive approach to managing the human resources within your company or organization will help you stay ahead of the game, help you identify problems early on and solve them.
“By developing an HR strategic plan, you can reflect on the successes and failures of previous quarters. Doing so will help you effectively plan for attracting and retaining the right talent, which is key to your business achieving success,” according to Employment Hero.
As you can see, the human resources strategy isn’t something you create in a day. But it also doesn’t have to be extra work that your company or organization has to struggle with.
You can outsource the entire process and have someone with more experience in the field handle create your HR strategy for you and show you how to implement it.
That someone is Tawzef for HR Consultancy. Tawzef will help you create, understand, and implement your HR strategy from start to finish. We will also show you how to continuously adapt your human resources strategy to the growing and changing needs within your organization.