Effective HR Strategy: 5 Steps & 10 Examples

employees building out an hr strategy

Who does an HR strategy help? From the title alone, it may sound like it only serves HR, but that's far from the case. In fact, an HR strategy can have a profound effect on every employee, across an entire organisation.

So, why is having a strategy so important? What are the key steps involved? How do you get buy-in from the highest levels of your org? In this article, we offer a five-point plan to turning HR strategy from fantasy to reality.

Develop a targeted HR strategy today with this handy guide.

HR Strategy: HR As Strategic Partner

On any given day, or in any given quarter, an HR department can be tasked with so many things and can be in charge of a wide selection of initiatives. Think of things like employer branding, recruiting, and employee retention — they’re the cornerstones of HR work, sure, but they also have an incredibly meaningful effect on business growth, in general.

After all, if an organisation can’t attract, hire, develop, and keep top talent around, then business will most certainly suffer. With that in mind, what success can all these initiatives bring if they don’t centre around a coherent strategy?

Here’s an example: As an HR leader, you have made it your goal to build a strong employer brand to gain more talent. But, the overall goal of your business is "strong growth."

At the same time, six existing employees leave the company because their focus was on employer branding measures instead of employee retention. Although achieved your HR goal, the company goals are now lagging dangerously behind.

What Is An HR Strategy?

An HR strategy is a document, a plan, or a vision that an HR or People Team puts together to help guide their efforts over an extended period of time. It is meant to align the goals of the HR department with the goals of the business, in order to formulate a plan and concrete set of measures to reach those goals (both organisationally and out in the market).

How Connected Are HR and Business Strategy?

They are incredibly connected. The internal goals set out in an HR strategy should seek to support the overall business goals. While this can be done directly or indirectly, there needs to be an understanding of how it is happening and how it can help.

Without this, you risk your HR strategy being too isolated from the rest of the business, and from upper management, reducing visibility and long-term efficacy.

Developing An HR Strategy In Five Steps

Ultimately, as a strategic partner of management, HR bridges the gap between employee satisfaction and organisational success. This five-point plan shows you how you can achieve this in just a few steps and thus ensure future-oriented people management.

Step 1: Define Success

The first step is one of visibility, as HR needs to know the overarching corporate goals of a business. After all, if an HR strategy is to be derived from and aligned to those goals, they need to know in what direction the company is currently moving.

If an HR department can’t answer this question, or if it is not made clear to them (or anyone else in the organisation), it will be difficult to adapt and attune its own goals to find success. In that event, take the initiative yourself and ask your management team the following questions, for example:

  • What success factors and metrics drive company performance?

  • How can HR help achieve those things?

  • Are there other ways HR can support the management team?

Based on the answers to the above, you should be able to derive some concrete goals. Some examples of this might include:

  • Increase overall employee productivity

  • Reduce or optimise hiring costs and ROI

  • Promote social responsibility across the organisation

Once you have an idea of success, you need to define it further. That means deriving some key performance indicators (KPIs), which you can then discuss with management to make sure everyone is aligned. This is the first step to truly strategic partnership.

Full focus for your HR strategy

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Step 2: Adapt HR Goals

After you’ve determined what success looks like at your company, in addition to the goals for HR, the next step is to make them real. To do this, create a quick table to compare the company goals with your HR goals and objectives.

Let’s try some of these examples on for size:

Strategy Example #1: Increase Productivity

HR Goal: Make your onboarding processes more efficient: How long does it take for new colleagues to be “on board”? What information might be lacking that could speed up this process? How should critical information be communicated?

HR Objective: Save time by automating administrative tasks (for example, by implementing an HR software).

Strategy Example #2: Reduce Costs

HR Goal: Strengthen employee retention and reduce turnover rates to reduce costs of lost talent or costs associated with finding new talent. After all, terminating an employee can cost a company up to 150% of their annual salary.

HR Objective: Cut costs with suppliers or vendors.

Strategy Example #3: Promote Social Responsibility

HR Goal: Promote a more socially responsible mindset in the company, by switching to more environmentally-friendly paper, coffee, and not missing out on the opportunity to communicate these changes and the ‘why’ behind them.

HR Objective: Initiate working groups to volunteer in daycares, animal shelters, etc.

Step 3: Define Measures

A goal is nice, but it’s far from the whole story. What you need are ways to get there: Concrete measures that can help achieve your goals in meaningful ways. A great place to start is by taking your goal, interrogating it, and building measures out of it:

HR Strategy Goal: Make Onboarding More Efficient

Associated measures:

  • Go more digital.

  • Ensure that all administrative tasks are completed before a colleague’s first day.

  • Set up an onboarding agenda for new colleagues between managers and their reports.

HR Strategy Goal: Increase Employee Retention

Related Action: Organise your own series of employee satisfaction surveys.Incorporate the following questions:

  • Do employees have the equipment they need to do their work?

  • Are they satisfied with their salary?

  • In which aspects can the company improve?

  • Rate the following aspects on a scale of one to five: Communication, transparency, strategy, collaborative working, respect, culture, etc.

  • Do employees feel challenged by their work?

You can then derive employee retention measures from the responses: Let’s say many colleagues say they lack the equipment they need to do their jobs and that it impacts their productivity. Now, they can’t perform at their full potential, which in turn negatively impacts the company’s goals.

Learn more about taking the pulse of your organisation with our guide here.

Step 4: Get Management On Board

If the idea of an HR strategy is to position HR as a strategic partner in management, then management also has a role to play when it comes to supporting HR in that role. This starts with budget approval and ends with backing from other departments.

After you have an HR strategy in place, you should share your plan with management. All parties should not only understand but be convinced of the various measures to help achieve goals.

Are your goals and actions truly aligned with business goals? Only after you can get a full-throated yes from all parties, that you’ll get the support you need to implement them.

Step 5: Measure HR Strategy Success

Not only should the success of your HR strategy be measured, it must be. After all, even the best measures are of little use if you cannot derive any insights from them. If you also want to convince management that HR is contributing to company goals, data is your friend and partner.

While that might sound obvious, did you know that only around 25% of HR professionals use data when it comes to evaluating the success of HR? So, even when it is obvious, that does not guarantee it is often implemented. But, this is also understandable. After all, how can soft goals like satisfaction or retention be put into numbers?

To do this, work with correlations (if in one department employees are very satisfied and turnover and absences are low, and in another, they are just the opposite, then you can make a connection) and draw comparisons. Finally, create a measure for each of your measures and compare results after specific intervals of time.

Measure: Employee Surveys

Metric: Conduct these surveys at specific time intervals, such as per quarter, and compare the results. If they turn out better than last time, this is a sign that employee satisfaction is increasing.

Measure: Digitise Onboarding Processes

Metric: Compare your time spent on administrative onboarding before and after implementing HR software. If you spend less time on onboarding, this is an indicator of increased productivity.

Should An HR Strategy Be A Stretch Goal?

Sure, but our point is that it shouldn’t have to be! Pulling together an HR strategy, and gaining buy-in on it can be done, and can be done in an actionable way. Break down the process into steps, set clear goals, measure them, and flourish.

Our five-point plan shows that HR aligning goals with overall business objectives doesn’t have to be a nightmare. Then, it becomes more a question of time: How much time do you truly have to focus on strategy? How much is admin holding you back?

The cost to your HR department, and your business, may be even larger than you think. Click the button below to learn more about how Personio can help automate core HR tasks, so you can gain time back to focus on other things: like your HR strategy.

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