Does your company have a solid HR strategy? In many large companies, strategic work in the HR area is already common practice, but small and medium-sized companies, in particular, are still lagging.
The role of the HR department has not yet changed everywhere from that of an administrative personnel manager to that of a strategic business partner. In addition, there is often not enough time to create an HR strategy, because the operational business with its daily urgencies is naturally prioritized. There can also be a lack of the right approach and knowledge.
And we want to change that. That’s why, in this article, we’ll show you why an HR strategy is important for companies of all sizes, what makes a solid strategy and how you can easily develop it step by step.
What is an HR strategy?
An HR strategy, or people strategy, is a company’s overall plan for managing its workforce to align with its business activities. It is derived from the company’s HR policy and overall strategy.
The strategy serves as a guide for all HR actions and provides direction for all key areas of HR, including hiring, performance appraisal, development, and compensation.
Developing a successful HR strategy
Developing an effective HR strategy does not usually happen overnight. Time and resources need to be allocated and representatives of the HR department and company management need to be involved. Having a concrete plan in place makes developing the strategy much easier.
Follow these five steps to creating a successful HR strategy:
1. Define goals
The HR strategy should answer the question: What concrete contribution must the HR department make to achieve the company’s goals? Therefore, the first step in developing the HR strategy is to break down the corporate goals to the HR department.
Example: Your company is pursuing an aggressive growth strategy to double sales in two years. This is to be achieved through a new product that is in development. To successfully bring this to market, you need skilled employees with the right know-how. These, in turn, are difficult to find in the labor market. Therefore, one goal of the HR strategy could be to strengthen the employer brand to stand out as an attractive employer for these specialists.
When formulating your goals, you can use the SMART formula to make them as concrete and actionable as possible. Each goal should meet the following criteria:
S — Specific
Describe your goal as specifically as possible. For example, “increase employee* retention by offering new training” instead of “increase employee retention.”
M — Measurable
How do you know when exactly the goal has been achieved? By making it measurable. For example, “hire 5 new employees” instead of “increase department size.”
A — Accepted
Your goal should be discussed with management and departments and generally accepted.
R — Realistic
Your goal should be realistically achievable. For example, it is rather unlikely that five new employees can be hired in two weeks, but it would be possible by the end of the next quarter.
T — Timeline
Define the exact date by which you would like to achieve this goal. A specific time helps to plan for the short and long term.
2. Analysis of the current state
The second step is to take a detailed inventory of the internal and external conditions. First, you want to answer the question, “Where are we right now?” Here is an overview of factors you might consider in doing so:
- The corporate and management culture
- The business model and its future viability
- The age structure in the company
- The size of the company
- Current key figures on the performance of the HR department
- Working time models
- Compensation structures
- Current employees retention and development programs
- The labor market and availability of skilled workers.
- The industry in which the company operates
- The competitive situation
- Demographic trends
- Technological progress
- Changes in the legal situation
- Demands of applicant target groups on employers
- The current perception of the employer brand
The SWOT analysis is a useful tool for analyzing the current situation. It can be used to identify and document strengths and weaknesses as well as opportunities and threats in HR management.
3. Find suitable measures
Then, in the third step, compare the current state with your goals and develop options for action that can close the gaps. First, you should develop a broad range of options. Then you can evaluate each option based on these questions and select the best ones from them:
- What are the costs associated with the actions?
- Are there risks and what are they?
- How easy are the measures to implement?
- What are the benefits of the measures?
4. Plan implementation
Now it is time to put the selected measures into practice. In most cases, this cannot be done all at once. In addition, many measures, such as the introduction of HR software, must be planned for the long term and require several steps in the implementation. For example, it is a good idea to draw up a plan that defines who has to do what and by when, what the goal is, and how success will be measured.
The communication of the new strategy also needs to be planned. Think about the changes that will affect employees and how best to inform them. Communication channels include company meetings, the intranet, newsletters, or the employee magazine. It is important to involve top management and ensure transparency.
5. Monitoring success
In addition, it is essential for successful HR management in the long term to regularly review progress in implementing the HR strategy. HR key performance indicators, which may already exist or need to be redefined and determined, can help in this process. In addition, these should in any case be relevant for the strategy review and also be related to the company’s success. In addition, external benchmarks with which the company can compare itself with competitors are often helpful.
Thus, you should answer these questions to effectively control success:
- Which goal can be controlled by which key figure?
- Who collects the key figures and with which method?
- How often are the key figures measured and compared?
- How are the key figures presented to those responsible?
Developing a well-thought-out HR strategy can seem like a mammoth task. Once it’s done, no one wants to venture back into it anytime soon. However, the strategy is a living document. It should also be reviewed at least once a year and adjusted if necessary because general conditions and corporate goals can change. The HR strategy must be able to react flexibly to this to always remain relevant.
You can also conduct several employee-related surveys to understand their needs and improvements on the company premises. We would recommend you use HeyForm to conduct surveys for your company with 100+ templates HeyForm would be the better choice for your HR goals.