Why HR Strategy Matters & 5 Tips For Creating Yours

If you’ve started a company from the ground up and found yourself challenged with people issues, you understand why HR strategy matters.

If you’ve helped a struggling corporation turn around and restructure, you understand why HR strategy matters.

If you’ve had to pivot your business’s operational strategy and design, you understand why HR strategy matters.

There’s a reason we’re passionate about human resources and people strategy: we’ve seen the impact getting it right can have on an organization. Everything your HR team does should contribute to the bottom line and success of your business, and not having an HR strategy in place can damage your business or prevent it from reaching key goals.

Let’s dive into why HR strategy is essential in today’s dynamic economy.

Why Have an HR Strategy?

For starters, your competitors have one.

Yes, your competition likely has an HR strategy aligned with business goals that they’ve been successfully implementing for years. For example, if you’ve experienced talent loss to a competitor, you’re probably competing with a more successful employer brand, talent acquisition strategy, and total rewards package.

A strong HR strategy allows your competition to attract top talent that you may be unaware of to build their team and empower decision makers.

Having a strategy allows you to move quickly.

Having a clearly defined strategy that every HR team member understands and successfully executes allows you to move quickly when it comes to growing or pivoting your people function.

Top talent goes quickly, and it’s imperative to have the ability to efficiently onboard talent so they can contribute to your business goals. With quickness comes nimbleness, and in today’s rapidly changing competitive landscape, having an efficient workforce talent strategy – including both permanent and interim resources – is a competitive advantage.

It impacts your business’s performance.

Your HR strategy directly affects your company’s performance. A well-executed strategy improves business results in a number of ways including reducing business expenses, driving revenue, setting the quality and innovation standard in your industry, improving productivity, and encouraging creativity, to name a few.

A holistic HR strategy supports your organization’s strategic and long-term goals; goals like structure, quality, culture, values, and commitment. A workforce that’s engaged and aligned with business and HR strategy can act efficiently and cohesively to leverage future growth opportunities.

If you’re still unsure about the value of an HR strategy, consider some of the top-performing businesses in America like Netflix, Bank of America, and XPO Logistic. These corporations set the bar for people strategy and attract top-tiered talent from around the globe. Their employment brand is strong and they achieve or exceed their business goals annually.

When you sit down to create an HR strategy of your own, take into account the following five tips from hrQ’s Managing Partner, Brian Wilkerson.

Tips for Creating an HR Strategy

Your HR Team Should Understand Your Business’s Goals

Make sure your entire HR department understands your business’s goals and HR’s role in supporting those goals. While this may seem like a no brainer, we’ve consulted HR teams that don’t understand the direction of the business or how their day-to-day work impacts that direction.

When every HR individual grasps and is aligned with your greater business goals, your HR strategy will be executed with better diligence and grit. Similarly, team members feel empowered to act on the strategy and provide effective solutions to problems.

To enable this knowledge share, your chief people officer needs to be in lock-step with the executive leadership team so they can create and execute a fully aligned HR strategy and train leaders underneath them.

Weakness Can Spill into Other Areas

Your HR strategy should include at a minimum:

• Talent acquisition
• Talent retention
• Talent development
• Workforce planning
• Organizational design
• Compensation and benefits planning
• HR Analytics

These segments are incredibly different and require distinct skill sets to manage. And if there is a weakness in one area, it can quickly affect others.

For example, a weak retention strategy may strain acquisition and impact workforce planning models; especially if those leaving are managers or subject matter experts. And with poor compensation planning, you may not be able to attract the right candidates.

Tip: If your HR department is small and you can’t realistically hire for each position, consider interim HR staffing. You can bring in an HR expert to create processes and programs for your company that will operate once they leave. Pair this with consulting and almost any business can have an ROI-positive human resource solution.

Include Organizational Design in your HR Strategy

To put it simply, organizational design takes technology, workflows, or talent inefficiencies and turns them into actionable opportunities. Organizational design is something that constantly evolves with your company’s goals and internal and external markets.

Having this outlined in your HR strategy allows you to optimize and measure your performance and hold your team accountable. It’s something that should be revisited often to ensure the structure is still relevant and producing results.

Include Workforce Planning Too

Workforce planning can help you during both internal and external market changes. To summarize, workforce planning helps with:

• The ability to evaluate business scenarios based on complex models like workforce implications, cost, and feasibility.
• Risk management related to team members
• The prioritization of human capital investments
• Finding talent solutions that match the job, location, and cost requirements
• Leveraging that talent across throughout your entire organization
• Using current and historical data to make better business decisions
• Source and retain critical talent

In fact, workforce planning is one of the most critical HR strategic capabilities.

Plan for Leadership Development

Something that is often overlooked is the development of HR leaders.

While you might have a strong set of HR leaders currently, is your business equipped to manage future challenges if your CPO leaves? Companies and HR executives need to be developing future leaders within the organization.

Note the leadership qualities and skills of future leaders will vary from traditional skill sets. Rather than just soft skills and knowledge of HR programs, future HR leaders need to build robust competencies like working with artificial intelligence, big data, advanced workforce modeling scenarios, and translating complex business challenges into innovative and effective HR strategy.

These capabilities are vital for any HR manager who may need to step into a leadership position in the interim or desire to develop into tomorrow’s executive HR role.

Final Thoughts on HR Strategy

An HR strategy takes a lot of effort to create, implement, and analyze. But it’s fundamental for any business that strives for sustainable competitive success and profitability. Beyond building a reputable culture, HR strategy ensures your team is prepared and motivated to help achieve the overarching business goals.

If you need help creating or upgrading your HR strategy, consider using HR consultants or interim HR experts to analyze your business and assess where the HR organization can help move the needle.

hrQ is a national HR recruiting and consulting firm that can help you find HR talent as well as define your HR and talent strategy in order to grow your business. Contact us to learn more about how we can help you.