How to develop an HR strategy

Check out these 4 steps to building a successful HR strategy for your organisation.

The HR department is an extremely important part of any organisation as it's responsible for the overall talent strategy of the business.

Generally speaking, most HR departments look after numerous tasks of a high importance to the business, from talent acquisition, employee performance, retention and engagement, protecting the organisation from litigation and liability, to training and development.

To ensure that the HR team maintains a strong level of efficacy, it is useful to develop and instil a clear HR strategy. This strategy could be used to present the business’s overall plan for managing its human capital in alignment with overall business goals and objectives. Having a well-defined strategy sets the direction for all the key areas of HR.

Below are 4 key steps to developing an efficient HR strategy.

1. Understanding the overall business strategy

To begin to develop an effective HR strategy, it is necessary for members of the HR department to understand the overall business strategy that is present within the organisation. It is critical that the HR department understand what the businesses overall goals and objectives are, so that they can begin to develop their own HR strategy which will support their achievement.  

For example, if the company wishes to create a more diverse workplace, it is crucial for the HR department and strategy to attract and hire the best diverse talent available to reach the organisations goal while encouraging productivity and business growth.

It is apparent that the success of strategic HR is dependent on how well it links to their company’s values, goals, and objectives. This is why it is critical to be able to articulate both the short and long-term business goals to the relevant HR personnel.

2. Where we are vs where we want to be

Once the overall strategy is understood, it is important to recognise where the HR department and strategy is currently. Evaluating their current HR capabilities, and capacity will help them be able to recognise barriers and deficiencies that exist within the current HR department and estimate the future requirements that will be needed to sustain and support the company's goals.

Once this is completed, they can begin to plan for where they want to be. This is done through the creation of goals and objectives which will develop into a HR strategy; they can then implement a strategy to capitalise on any opportunities which are present within the organisation and aim effectively counter the inhibitors that may exist.

An example of this would be if that in their efforts to create a diverse work environment, they noted that their current application process is one which unconsciously favours a specific group and is biased against minority groups. The HR team then devises a strategy which outlines objectives that would address the process and produce one which is more open to their desired minority groups.

3. Create clear goals, deliverables and KPIs

The next step in developing an effective HR strategy would be to create clear goals and deliverables and to measure them with strategic KPIs. The creation of clear goals and objectives are essential to developing an effective HR strategy. Clear and attainable goals and objectives enable measurable and focused actions which will help the organisation achieve productivity, growth and their own strategy.

Next, establishing HR deliverables will assist in the fulfilment of these goals and objectives. These deliverables are HR Performance Drivers and enablers. Performance Drivers are the core people-related capabilities or assets that enhance the process while enablers reinforce the drivers. This combination of deliverables will strengthen the HR and overall organisation strategy.

Finally, to make sure that the HR goals and deliverables are being correctly implemented and adhered to, it is crucial to monitor them through KPIs. A strategy will never be fully effective without consistent adjustments to match the change in the organisation and market and without monitoring its current progress. Utilising KPIs and other measurement tools allows the HR team to make sure they are delivering the value expected of them by their own developed strategy and by the organisation itself.

4. Strategic alignment, and the correct delivery method

An HR strategy can never be realised in isolation, it requires the strategic alignment of management, a budget and the correct delivery method of their plans.

The strategic alignment of management is a necessity as it is important to include members of other departments within the organisation to fully understand their needs and expectations of HR. This will allow the HR team to develop and fine tune their goals and objectives to meet the needs of all of the different components of the business and of their own strategy.

With this alignment, it is far easier to effectively create a process and method to carry out this strategy. This allows the assessment of the current HR service delivery model, if there is one, and assess how to effectively optimise it to help deliver their services and add value to their strategy.

Final thoughts

Recognise that a strategy is a long-term plan and isn’t only for the short-term.

This doesn’t mean that a HR strategy isn’t subject to change, it should evolve with new market information or organisational practices for example. But it is important to ensure that with a HR strategy it is being developed to establish an HR brand and culture.