How To Create a Human Resource Strategy

human resource strategy

Nearly every company with employees has a human resources (HR) department or someone in charge of personnel. Their responsibilities range from administering employee benefits,  facilitating hiring (or firing) of employees, updating and communicating company policies, outlining company culture, and training employees on workplace behavior.    

At some companies, an HR department makes critical human resource management strategy decisions autonomously, without input from upper management. At others, the HR departments serve as a conduit between senior executives and employees. Regardless of each company’s particular HR structure, the overall long-term HR plan for employees is called a human resource strategy, or HR strategy.  

Shortcuts

What is a human resource strategy?  

A human resource strategy is a roadmap that dictates how a company manages their employees and implements personnel policies in accordance with the business’s mission and organizational culture. HR strategies vary, contingent on the type of business, size of the company, company goals, leadership style, mission, business strategy, and core values.

For example, an HR strategy aimed at improving employees’ health might include HR practices such as free in-house meditation and yoga classes, reduced gym membership fees, or annual flu vaccinations. Each policy is part of the larger HR strategy, which makes a concise HR strategy important.

Some business leaders and HR leaders find it helpful to create a personnel strategy mission statement, which acts as the company’s HR North Star. It helps guide a company’s HR policies when faced with emerging trends, from cultural shifts to technology advances. 

Benefits of having an HR strategy

HR strategies are critical for employees to feel valued, helping to build a mutually beneficial relationship between workers and their employer. These benefits may include:

  • Improving employee engagement 
  • Attracting top talent
  • Retaining talented employees
  • Reducing outdated processes
  • Boosting productivity

Employee engagement

Having an HR strategy that focuses on employees’ well-being and not maximizing profit can create a more engaged workforce. Clearly defined company policies and HR processes, from health insurance coverage to workplace safety, will appeal to potential and current employees. A worker who feels valued is more enthusiastic and loyal and can boost company growth and success.

Attracting top talent

A company with a good human resources strategy often attracts the right types of people who have the skills, temperament, and experience for open positions. Without a clearly defined HR strategy, an HR department may waste time and resources during the recruiting process. Hiring practices not part of a broader HR strategy can lead to new hires who don’t meet expectations. 

Retaining talented employees 

Paid time off, employee development opportunities, and benefits packages including parental leave can help a business retain talented employees. A successful HR strategy—one that is generous and centered on employees—gives companies a competitive advantage, letting talented employees know they are valued.  

Reducing outdated processes

Technology moves fast, and so do cultural norms. An effective human resources strategy accommodates change, whether it’s societal, ecological, legal, or technological. HR strategies attuned to external factors can ensure your HR department nimbly alters policies when needed. A policy change could be as routine as updating software for employees filing their expenses or one that responds to social issues, such as ensuring transgender equity in the workplace, all without getting bogged down by bureaucracy.

Boosting productivity

A company with a positive work environment, generous benefits, and other employee-centered HR programs like free education will likely have loyal and hardworking employees. Dedicated employees are committed to the company’s growth and can help boost productivity. 

How to create and implement an HR strategy

Creating an HR strategy for the first time can seem overwhelming. But remember, it’s a marathon, not a sprint. A comprehensive HR strategy can take as long as a year to complete, but these five steps can help business owners get started in establishing an effective HR strategy:

  1. Define the mission.
  2. Assess skills.
  3. Identify deficiencies.
  4. Develop solutions.
  5. Measure and manage.

1. Define the mission

What is your company’s mission? What do you want to achieve? What are your organization’s goals, and are they clearly articulated in your mission statement? An HR strategy should align with your company’s mission and your company’s business strategy. It needs the involvement of  HR professionals, as well as buy-in from upper management. Companies often review and update HR strategies annually to keep up with cultural and technological changes that affect the workplace.

2. Assess skills 

With the company’s mission and objectives in mind, what are the skills, competencies, and policies needed to achieve company goals? What are the current capabilities of the workforce? What are the company’s strengths? These can include hard skills related to subject expertise and technical knowledge, or soft skills such as effective team building and strategic planning. An honest assessment of the company’s abilities and processes will help to build a long-term HR strategy. 

3. Identify deficiencies

Find deficiencies by comparing your mission and goals to the skills assessed above. SWOT analyses (a detailed look at strengths, weaknesses, opportunities, and threats), as well as people analytics data points, can help in this step. This can help reveal deficiencies in any skills, policies, or systems that impede your company’s efforts. Company-wide deficiencies might range from the inability to attract qualified new talent to an unmotivated workforce to slow business growth.

4. Develop solutions

Develop solutions within an HR framework to fix any shortcomings. You could create performance incentives to improve productivity, or foster career development through HR activities and initiatives, such as free education and development courses or a robust mentorship program. Tackle lukewarm company morale with programs like community service volunteering and team-building activities. Know your budget and resources, and work within those parameters because they’ll determine which issues to prioritize.    

5. Measure and manage

Start the HR strategy process by setting up a timeline with quantifiable goals. Implementing a new HR strategy through policies requires tracking and measuring tangible HR metrics like retention rates, job satisfaction, employee engagement, and key performance indicators (KPIs) that measure performance. Use these benchmarks to tweak and adapt your strategy and share critical outcomes with key stakeholders. Communication between employees, HR personnel, and management is fundamental when creating and managing a HR strategy. 

Human resource strategy FAQ

What is an example of a human resource strategy?

A company might prioritize professional development as part of their HR strategy. In practice, this might include free classes and workshops in subjects relevant to an employee’s role, or subsidizing a staff member’s education if they are earning an advanced degree. 

What is strategic human resource management? 

Strategic human resources management is a term used in tandem with HR strategy, but it’s slightly different. Strategic HR management is the implementation and management of a human resource strategy.   

What are the objectives of HR strategies? 

The goals of HR strategies include attracting and retaining top talent, boosting morale, providing opportunities for professional development, and minimizing employee conflicts—all with the goal of increasing your business’s performance. Essential components of a typical HR strategy include recruitment, compensation planning, diversity and inclusion, employee well-being, and succession planning. 

What businesses need a human resource strategy? 

All businesses with employees can benefit from an HR strategy, but it’s imperative for companies and organizations with a large workforce. An HR strategy lays out processes for companies to enhance their employees’ quality of life on the job and develop their human capital as part of a broader goal of improving productivity.

About the author

Nick Winkler

Nick Winkler is a contributor to the Shopify Plus blog and founder of The Winkler Group, a strategic communications firm that provides content marketing services to the world's best-known brands, businesses, and marketers.

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