What is Human Resource Strategy? Discover Steps to Develop an Effective HR Strategy

We all know how important a human resources department is to any organization, whether large or an SME. But did you know that all your HR efforts could go in vain with a lack of a powerful human resource strategy? Yes, an HR strategy is important for a business. And in this article, we are going to explore everything about it. Right from the meaning and benefits to the ways of developing a good human resource strategy; we will cover everything.

Are you a businessman? Then you already understand how critical a pillar of human resource is for your entity to stead the ground in today’s competitive market. It is the people, after all, who will take the values, mission, and goals of your business forward. It is their collective effort channeled in one direction to attain the desired level of success, irrespective of the industry you are in.

However, achieving this channeled effort is not a piece of cake. And that is exactly where the idea of human resource strategy steps in. Let’s first understand what that means.

What is Human Resource Strategy?

Going by the definition, a human resource strategy refers to a blueprint that aligns the HR functions of an entity with that of its primary objectives. The purpose of this alignment is to boost the performance of the business and to ensure that the pursuit of goals stays on the right track.

An HR strategy is long-term and futuristic. You can call it number-driven as well. Ideally, your HR strategy would undergo periodic revisions every year to remain relevant at all times.

It defines the way all the prime components of HR would work, such as recruitment, training, and development, keeping the organizational growth in mind. At the same time, it also stresses on the personal growth of the employees.

The senior HR management is responsible for crafting a robust human resource strategy based on the organization’s analysis, current, and future requirements as well as market trends among other external factors.

Got the meaning? Now let’s move forward to unearth the importance of human resource strategy.

Why is HR strategy important?

A well-placed HR strategy is nothing less than a powerhouse with the capability of turning the tide in your business’s favor. It not only strengthens your organization but also brings in more than one benefit in ways you would not have imagined. Here’s how:

Advantages of Human Resource Strategy

› Connecting people with the goals of the organization

A Strategic human resource plan acts as a bridge between the most precious asset of the business - the people - and the strategic direction the company is heading to. It continually makes sure that the workforce feels connected with the organization and its objectives at any given time. Working towards those goals, hence, automatically becomes a byproduct.

In the absence of this deep-rooted connection, employees would place their personal goals ahead of the firm’s, which, is far from an ideal situation for any business.

› Bringing in the right people for the right role

With a well-strategized HR plan, the HR managers can start looking for the “best-fit candidates” even before the opportunities arise. It is called a proactive approach. HR managers analyze the company’s goals and potential future requirements to forecast the future human capital needs of the company. Moreover, it also enables them to start training the promising current employees for future, more responsible, roles at the right time.

The lack of such a strategy may cost your company a lot of time, money, and effort in unthoughtful quick hiring or getting wrong people aboard.

› Building employee engagement

It is not enough to get the best people into your organization. They need to form a long-term tie with your firm. And that happens only when there is higher employee engagement, from top to bottom. A right human resource strategy helps achieve that.

It helps you assess the current engagement levels of the workforce and improve where you are lacking. Based on that, you can introduce new plans, such as rewarding the best performer every month or offer gift cards for innovative ideas. The goal is to create a happy space where employees feel welcome and encouraged.

› Boosting team spirit

A strategic human resources plan focuses on keeping each stakeholder together to walk towards the organizational goals. Hence, it is quite obvious for it to put emphasis on teambuilding activities. Both in-office and outdoors.

You can keep an hour or two aside for various fun tasks per week like playing games. You can also plan a weekend getaway that helps your team bond outside the office environment. It creates a sense of togetherness among your employees, fostering their communication and collaboration skills.

› Developing a balanced, flexible workspace

If not for a well-thought HR strategy, an entity would struggle to resolve conflicts. Maintaining discipline would also become difficult which would affect the overall harmony of the firm.

Apart from that, the HR strategy includes a plan for consistent performance monitoring as well, the results of which, are critical for future planning and filling the skill gaps. It also stresses on building an environment that’s adaptable to the changing market needs and trends. Take learning and development as examples. The HR leadership continually refines the learning programs so that the workforce finds it easier to keep pace with changing technology and innovation.

Realizing the power of human resource strategies, many forward-looking firms have begun including their HR leaders in the board meetings, giving them access to learn about the visions of the C suite. All of that to enable the HR leaders to craft a strategic HR plan more proactively.

How to Create a Human Resource Strategy?

Developing a successful HR strategy is easier said than done. There are multiple components to consider with minimal scope for errors. Fortunately, there is a step-by-step guideline you can rely on to create a robust HR strategy for your organization. Let’s explore what it entails.

Steps to Develop Human Resource Strategy

› Think About the “Bigger Picture”

No matter what HR strategy you create, it has to be “the best supporting hero” for your organization. Now, that is only possible if you (your HR leadership) have a clear understanding of what your business strategy is.

You can begin by identifying the primary driving components of your business. It can be a supply chain or technology or manufacturing or anything based on your niche. Then, understand how those driving forces can affect your human capital and in what ways. Knowing the first two will help you determine what kind of fundamental contribution is required from your people to achieve the desired business performance. Once you have these factors sorted, it is about connecting the dots.

› Come Up with a Mission Statement

A footballer almost always has a clear mission in mind: to strike a goal. The goalkeeper, similarly, has a mission of stopping the goals. Likewise, your organization, too, needs a definite mission statement.

When there is a precise mission statement, your people know for sure why they are doing what they are doing. Or why a particular process will be more beneficial than the other. In simple words, a mission statement defines the purpose of the organizational operations loud and clear. That, in turn, helps define each person’s role in a more efficient manner.

› Carry Out SWOT Analysis

The SWOT analysis refers to analyzing the strengths, weaknesses, opportunities, and threats for your entity. The first two are obtained through internal analysis and the last two by external analysis.

The internal analysis of your entity, department-wise, helps unravel the capabilities and competence of your workforce. Whether they are experiencing any issues, and what potential measures you can take to solve them.

The external market analysis gives you a clearer picture of the threats and opportunities in terms of your personnel. You will get to know whether there are chances of outside factors impacting your business and how, whether there would skill gap and shortage of talent and effects on staffing due to technological advancements.

The results of this analysis will assist you in discovering the role, competence level, and future demands of individual departments in your firm. It makes for a pivotal step for strategy development.

› Perform a Thorough Analysis of HR Process

Apart from SWOT analysis, it is equally important to conduct an honest analysis of your present HR systems. Doing so, you would realize both the strengths and flaws of your current human resources process.

The analysis would also help you gauge where your firm is standing now and what it will need to reach where it wants to be in the future.

For instance, some of your current HR processes may have been designed to suit the requirements of your entity considering its stature five years ago. It may or may not fit its needs in the present scenario and in the future.

In such a case, the HR process analysis helps you plan and take appropriate action on the improvement of the process. It also opens up avenues to introduce and implement new procedures for better business growth.

› Identify Issues and Develop Solutions

The in-depth analysis, as we explored in the preceding points, will let you spot critical problems with your current organizational procedures which, in turn, lets you focus on finding solutions early on. It will create the roots for a powerful HR strategy that strengthens each area of your business, from employees’ training and development to planning and management.

› Implement and Evaluate

Executing the HR strategy is not the end of the road. You need to evaluate it periodically to ensure it doesn’t deviate from its purpose of supporting business objectives.

What are the Best Human Resource Strategies?

The human resources strategies tend to vary with the type of organization and its goals. However, we can take a leaf out of some of the best HR strategies that hardly lose their significance.

› Employing a fair system of evaluation

A fair system of evaluation is fundamental to the growth of both - the employees and the firm. It is even better if the system also allows employees to self-assess themselves for empowering them further. For a fairer assessment, there should be consistent tracking of employees’ performance and achievements over a year. Not only by their immediate bosses but also by either the next high-level reviewer or cross-functional manager.

Such transparency in evaluation fuels a strong organizational relationship and boosts performance.

› Being ready for the future

Thanks to the rapid technological evolution, we no longer have a conventional way of working. Many entities across the world already have more remote employees and gig workers collaborating with their in-house team. The trend is only rising with increasing globalization. Thus, a futuristic yet flexible HR strategy is the need of the hour.
A solid plan of action that can adapt to the changing technology while striking a perfect balance between a global workforce.

› Embracing technology and analytics

An HR strategy rich in technology is bound to go a long way in this technological era. Many tech-savvy HR managers already use analytics to estimate, as well as rank, a variety of operations, right from employee appraisals to retention.

In addition to that, using the latest technology within the organization elevates employee experience tremendously. For instance, employees can avail of information on their remaining leaves through chatbots. Candidates can have an enhanced interview experience, including application and onboarding, through a customized digital interface.

› Developing a modern benefits package

The regular assessments and analysis enable you to determine the capabilities and weaknesses of your workforce. However, just having that information is not enough. There has to be attractive rewards and benefits to keep them engaged. To let them feel valued. There are a host of exciting benefits that today’s modern workforce expect, including flexible time, regular in-house and outdoor fun activities, parental and caregiver leaves, paid holidays, performance bonuses, and transition perks, to name a few.

Did these HR strategies seem interesting? Now, let’s see some of the most appealing examples.

Human Resource Strategy Examples

It is usually not about the perfect HR scheme. It is more about a relevant plan that’s as innovative and unique as your enterprise. Examples of HR strategies of many leading giants prove the same.

Take Nissan for example. Its “kaizen” concept allows employees to continuously enhance the firm’s internal processes. Every employee has the space to brainstorm, alone or with one other, for incremental enhancement of the work processes. It generates greater productivity, better quality, and more safety.

The popular streaming platform, Netflix, makes for another good example. Their strategy is to get the topmost players onboard and provide them with all the freedom they would need to be responsible at their jobs.

Furthermore, Netflix believes in conveying their business context to their workforce as that’s the only way to attain growth: of the company and the individuals associated with it.

What are the Types of Human Resource Strategies?

While each organization will have its own HR strategy depending on their individual checklist and requirements, they would choose from its two basic types.

› Specific strategies

The Specific Strategy is the type of human resource strategy that covers multiple aspects of the business. It lets your entity contemplate strategic actions you can take in the areas of:

• Knowledge Management: It refers to the intention of your entity with respect to acquiring, creating, sharing, and utilizing knowledge to enhance performance alongside learning.

• Talent Management: It concerns with what your organization plans to do to be on top of its game regarding talent management.

• Continuous Improvement: It defines the way your business should offer an incremental improvement on a regular basis. For desired results, it’s even better to keep a check on the operations over a defined period.

• Learning and Development: It refers to providing all your employees, from top-level to the bottom-level, with an environment that allows them to learn and grow.

• Sourcing and Retaining: It deals with sourcing expert talent and implementing measures to make them stay at their job for the long-term.

• Employee Relations: It refers to the steps your business can take to manage its relationship with employees.

• Reward Policies: It helps your firm to review and upgrade its reward policies to surpass the needs of stakeholders.

› Overarching strategies

The Overarching Strategies are plans that detail the common intentions of an organization on ways they should:

• Conduct employee management and development
• Attract and retain talent
• Keep the workforce committed, engaged, and motivated

In simpler words, you can think of overarching strategies like one that describes your business’s aims and mission statement, setting the grounds for more specific strategies to thrive. It forms the basis for schemes that will be responsible for attaining the desired level of efficacy.

Final Thoughts

A human resource strategy, as we learned, makes for an integral part of a business, irrespective of its niche and geographical area. While its main goal is to aid businesses to achieve their goals, it also takes into account the individual aims of the workforce along the way. It is important to note that creating an effective HR strategy takes time and so does its execution. However, if your strategy is well-founded, it is bound to make the desired difference to your organization.