What is an HR strategy?

Your company’s HR department shapes the employee experience from beginning to end. It’s the first department that a future employee will engage with during the recruitment process, as well as the last if they ever decide to move on. HR activities can be divided into five main functions:

• recruitment
• compensation
• development
• health and safety
• employee and labour relations

Because of HR’s broad remit, having carefully planned and detailed strategies in place facilitates smooth operations and ensures that any problems can be dealt with swiftly and consistently. You can choose to implement a strategy that encompasses all of these functions or several strategies that each focus on one area.

Why is it important to have an HR strategy?

At its core, a human resources strategy is a roadmap that your company creates to manage employees in a way that aligns with company values and goals and upholds the law. Let’s look at some of the reasons why having an HR strategy is vital, particularly for larger companies.

• Attracts talent: a strategy that emphasises talent acquisition can give your company a competitive advantage. This means finding the right people with the right skills and placing them in the right position.
• Improves employee satisfaction and retention: employees who feel heard and looked after can become more engaged and motivated. This leads to greater productivity, innovation, team spirit and loyalty. Retaining employees for longer also cuts down on the workload and costs associated with recruitment.
• Facilitates easier performance management: a clear strategy can streamline the performance-management and appraisal processes, essential for employee development and growth.
• Ensures compliance and manages risk: effective HR strategies help companies comply with labour laws, regulations and industry standards. This can mitigate legal and operational risks associated with employee recruitment and management.
• Promotes diversity and inclusion: by upholding these values, your HR strategy can foster a more equitable workplace, enhancing the employee experience as well as the company’s reputation.

Related: HR policies: how they can influence employee attitude and performance

What are the two types of HR strategy?

HR strategies typically fall under one of two subtypes: overarching strategies or specific strategies.

1. Overarching strategies

These have a broad scope and influence the management of your entire workforce. It’s a holistic approach to HR, as it impacts employees as a collective.

2. Specific strategies

These are designed to address particular facets of HR, like talent management or mediation. Because specific strategies are targeted, they can be very detailed and enable you to get to the core of a particular problem or objective.

Knowing which subtype your desired strategies fall under is essential to your planning process and can help you communicate your goals and ideas to everyone involved.

Steps to creating an effective HR strategy

Implementing a new HR strategy is a multi-layered process. Breaking this down into specific actions can give you a blueprint to follow and ensure that smaller details aren’t overlooked.

1. Identify areas for improvement and set goals

The first step to developing a new strategy is to carefully look at your existing processes and determine what’s working and what isn’t. Once you know what you need to work on, you can begin to set out your objectives. You will want to keep your company’s values in mind during this step to ensure that your goals are in alignment with your ethos as well as the company’s overarching vision.

2. Analyse current performance

During this stage, your first task is to look at how employees are performing. This includes evaluating if their current roles sufficiently align with their unique skill sets and whether they have the tools and support needed to perform their best. Once this is done, you can move on to a SWOT analysis. Standing for strengths, weaknesses, opportunities and threats, a SWOT analysis provides a robust framework for identifying areas of potential growth, mitigating risks and optimising your company’s existing capabilities. 

3. Assess your talent acquisition strategy

This step involves deciding which skills best align with company goals and how you can headhunt people who excel in those areas. An awareness of skills shortages, including where vacancies are likely to crop up in the future, can make this step easier. This is also a good time to review the interview process and ensure that it aligns with your company’s commitment to diversity and inclusion.

4. Look at employee development and turnover reduction

At this stage, you can benefit from using the information that you gained during the performance-analysis step. This can help you implement plans to maximise each employee’s potential and increase their job satisfaction. You may also want to calculate your turnover rate to help you pinpoint which roles have the least satisfied employees and get to the root cause of any resignations. This can mean looking at areas like compensation, benefits, training and upskilling, workplace culture and work-life balance. Armed with this information, you can come up with changes to improve employee retention and streamline the promotion ladder.

5. Determine your existing capabilities and evaluate whether additional tools are needed

Using the SWOT analysis that you created during the second stage, you can review the capabilities of your existing team and identify any missing skills, roles or technology that’s needed to reach your goals. You can also look into investing in software or other tools to help prepare, initiate and evaluate your strategy. These could include:

• digital recruitment tools or membership to recruitment platforms
• employee recognition platforms that can boost morale and motivation
• internal communication tools like Slack that enable teams to liaise and network more effectively with one another and share resources
• candidate screening tools that automatically identify top applicants or platforms that offer tests to applicants – these can help keep your staffing costs low
• time management software that can be used to streamline processes and increase productivity

Related: What is a matching and hiring platform? A guide for employers

6. Allocate funds

Review your budget and decide to what extent you can increase HR spending or move funds from other areas of the business. Once you have an amount in mind, you can decide where to allocate these funds based on the priorities of your strategy that you determined earlier in the process. 

When your strategy is in place, you will want to make sure that your HR workforce is equipped for the challenge. This can involve recruiting additional staff as well as preparing your existing employees with training, including on any new software that you may be introducing. After implementing your strategy, you can use key performance indicators (KPIs) to monitor progress and make any necessary adjustments or changes to help you reach your goals.

Tips and best practices

Introducing new strategies to your human resources department is a labour-intensive process, but one that can reap substantial rewards. Here are a few ways that you can ensure that you are getting the most out of your new HR strategy.

• Make sure that all members of the HR team are included in the process – they know the job better than anyone else in your organisation and their insights and ideas are invaluable.
• Evaluate your planning and implementation regularly to ensure that you are remaining aligned with the project’s goals and the company values.
• Include management and stakeholders and encourage their feedback.
• Remember the basics – while administrative tasks are less exciting than brainstorming creative ideas, it’s vital to ensure that your plans are compliant with any relevant regulations and are achievable within your budget and timescale.
• To communicate your goals with employees and get everyone on board, you could begin your strategy planning by writing a mission statement.
• Research your competitors and market trends to ensure that the compensation and benefits packages that your company is offering are attractive to the most sought-after applicants.

HR strategies help bridge the gap between your company’s goals and the satisfaction of your workforce. When planned carefully, a comprehensive HR strategy can ensure that you attract and retain the best talent in the field, remain competitive and troubleshoot effectively when problems arise.