HR Strategy: What is it, and How is it Created?

Sometimes, when led by a serial entrepreneur, a business will have a plan to scale human resources (HR) as the company grows. But too often, the department is overlooked as a company starts adding more employees, meaning a comprehensive HR strategy is never implemented.

This isn’t a phenomenon limited to mom-and-pop shops in middle America either. Uber, for example, didn’t hire its first senior HR executive until 2014, after it already had more than 500 employees. That caused plenty of headaches down the road as the company dealt with allegations of sexual harassment and toxic workplace culture.

The lesson is that if you’re going to grow a company, you need to have an HR strategy in place from day one. But how do you get started?

Below, we will examine:

• What is an HR strategy?
• Types of HR strategies
• How digital HR strategies are becoming more prominent
• Some examples of successful HR strategies
• How to create the best HR strategy for your business
• Some of the challenges you will face along the way

This isn’t something you can overlook anymore. Ready to find out everything you need to know about HR strategy? Let’s get started.

What is an HR strategy?

An HR strategy is a long-term plan for how you will manage your human resources in line with your business goals. It will consider your company’s current and future workforce needs.

The goal of an effective HR strategy is to ensure that you have the right people, with the right skills, in the right place, at the right time  –  and that they are motivated to do their best work.

It’s important to note that an HR strategy is not the same as an HR plan. An HR plan is a document that sets out the specific actions you will take to achieve your HR goals, while a strategy is an overall approach you will take.

Key features of an HR strategy

While this is something that will be intrinsically linked to your company’s needs, there are some key features that all successful HR strategies have in common:

Linked to business goals

Your HR strategy should be closely linked to your business goals. It should help you achieve them, rather than being a separate entity. This means clearly understanding what your business goals are, and developing HR policies and processes that support them.

For example, if your goal is to grow your company by 20% in the next year, your HR strategy might focus on attracting and retaining top talent. This can include initiatives such as increasing your company’s visibility on job boards and social media, or offering more competitive salaries and benefits.

If your goals change, your HR strategy should change with them to accommodate the new direction.

Focused on people

Employees are the most important resource a company has, so your HR strategy should be focused on attracting, developing, and retaining the best talent. This means looking at things like your company culture, employee engagement, and development opportunities.

It’s also important to consider how you can make your company more attractive to potential employees. This might include offering flexible working arrangements or creating a learning and development program that helps employees further their careers.

An employee value proposition (EVP) is a great way to sum up what your company has to offer employees and can be used as a guide when developing your HR strategy. What you provide should be attractive to your target employees and aligned with your business goals.

Flexible

HR is one of the departments that change best practices the most frequently. As the workforce changes and new technologies are developed, what works today might not work tomorrow. For this reason, your HR strategy should be flexible enough to adapt to these changes.

This doesn’t mean that you need to change your entire strategy every time something new comes along. But it does mean being open to making tweaks and improvements as needed. One way to do this is by conducting regular reviews of your HR strategy and making adjustments based on what you learn.

For example, you might find that your employee retention rates are lower than you’d like. In response, you could make changes to your strategy such as increasing the frequency of performance reviews or offering more opportunities for professional development.

Even something as simple as changing the way you onboard new employees can make a difference.

Aligned with company culture

Is your business traditional or innovative? Big or small? Startup or well-established? Are you focused on diversity or do you have a more uniform workforce? Your HR strategy should be aligned with your company culture, as this is what will attract suitable candidates.

For example, if you are a small startup with a flat organizational structure, you might want to focus on hiring people who are creative and entrepreneurial. If you are a large company with a more traditional hierarchical structure, you might want to focus on hiring people who are good at working within established systems.

Neither of these is necessarily better than the other, but it’s important to make sure that your HR strategy is aligned with the culture of your company.

Recent studies have shown that up to 40% of job seekers list culture as one of the most important factors to them, sometimes even ahead of compensation. The next generation will likely place even more importance on it, meaning your HR strategy must align to stay competitive in the recruiting market.

Types of HR strategies

For some businesses, not every category of HR will apply. If you are a small business with few employees, perhaps recruitment isn’t top of mind. If you are a startup with a mainly remote workforce, communication and training may look different.

The conversation around HR strategies can be as broad or as narrow as you want. However, most businesses will find that they need to consider a few key areas.

HR risk management strategies

Every business faces risks  –  it’s an inevitable part of running a company. HR risk management strategies are designed to help you identify, assess and manage the risks associated with your workforce.

This might include things like:

• Health and safety risks
• Reputational risks
• Legal compliance risks
• Data security risks

Strategies for managing these risks will vary from business to business but could include things like implementing new policies and procedures, conducting regular audits, or providing training for employees. Somehow, you must find a way to mitigate the risks associated with your workforce.

HR recruitment strategies

If you want to attract and retain the best talent, you need an effective recruitment strategy. This will involve more than just placing a job ad and hoping for the best.

To create an effective recruitment strategy, you need to consider things like:

• Your company’s brand
• Your target audience
• The channels you will use to reach your target audience
• The types of roles you are recruiting for
• How you will assess candidates

Recruitment strategies can be very complex, but they don’t need to be. The most important thing is that you have a plan in place for how you will find the right candidates for your business.

HR communication strategy

A strong communication strategy is the key to any successful business, and HR is no different. An effective HR communication strategy will help you to spread your messages clearly and concisely to your employees.

It should consider things like:

• The best channels for communicating with your employees (e.g., email, face-to-face, intranet)
• How often you should communicate
• What kind of language to use
• Who should be responsible for communication

An HR communication strategy will help to ensure that your employees are always kept in the loop, whether it’s about changes to company policy or updates on the latest company news.

Digital HR strategy

As we move further and further into the technological revolution, how we manage human resources has to change with the times.

Digital HR is an approach to managing people that uses technology to automate, streamline and improve the employee experience.

Some of the most common applications of digital HR include:

• Online onboarding for new employees
• Automated performance reviews
• E-learning platforms for training and development
• Employee portal for access to benefits and pay information

Digital HR can be a great way to improve efficiency and communication in your organization. However, it’s important to remember that technology is not a replacement for human interaction. The best digital HR strategies will find a balance between the two.

Examples of HR strategies

To make sure that you understand fully, let’s quickly work through an example of an HR strategy that includes risk management, recruitment, and communication.

Welcome to FakeFax, our hypothetical telecom company. Their company goals are:

• To be the leading telecom company in North America
• To provide the best customer service in the industry
• To have a happy and engaged workforce

They are also focused on diversity, workforce flexibility, and providing a positive, modern company culture. With that in mind, they’ve created the following HR strategy:

Risk management

Knowing that a disaster or power outage can strike at any time, FakeFax implements a comprehensive risk management strategy. This includes data backups and disaster recovery plans for their systems, as well as employee training on how to handle customer service during an outage.

Recruitment

Intending to be the leading telecom company, FakeFax wants to make sure they are attracting the best talent in the industry.

They work with local colleges and universities to set up internship programs and identify top students who may be interested in working for FakeFax. They also use online tools like LinkedIn to attract passive candidates who may not be actively looking for a new job.

Communication

To provide the best customer service in the industry, FakeFax knows they need to have open lines of communication between their employees and customers.

They have a customer service call center where customers can voice their concerns or issues. They also encourage employees to give feedback on how they can improve the customer experience.

In addition, FakeFax has an internal communications team that helps keep employees informed about company news and updates.

This is just a quick example, but it should give you an idea of how an HR strategy can be tailored to fit the specific goals and needs of a business. It will also include harassment policies, benefits packages, and employee development programs.

How to create the best HR strategies for your business

It can be a daunting task to work out a full HR strategy once your business reaches a certain level. With dozens of employees spread all over the world, you can’t just sit down and come up with a one-size-fits-all solution. Starting to consider (and hire for) this process early is the best way to make it easier as your business grows.

Here are some tips for creating an effective HR strategy:

• Define your company’s goals and values. This will help you create an HR strategy that is aligned with the overall goals of the business.
• Conduct a needs assessment. This can determine what areas need the most attention from HR. These could be things like employee retention, training, and development, or benefits administration.
• Research best practices. Find out what other companies are doing to achieve success.
• Create a budget. This will help you prioritize which initiatives to implement first.
• Draft a plan. Make sure to outline how you will execute your HR strategy. Make sure to include timelines, milestones, and responsible parties.
• Implement your plan and track your progress. Regularly review your HR strategy to see if it needs to be adjusted based on changes in the business.

Creating an HR strategy can seem like a lot of work, but it’s worth the effort. By taking the time to develop a comprehensive plan, you can ensure that your business has the foundation it needs to scale successfully.

Challenges you will face

Even with plenty of preparation, you will likely face some of the same common challenges when implementing an HR strategy. Here are a few of the most common obstacles you might encounter:

• Lack of buy-in from senior leadership. If the CEO and other key decision-makers don’t see the value in investing in HR, it will be difficult to get them on board with your plans.
• Limited resources. Many small businesses don’t have the budget or personnel to dedicate to an extensive HR strategy. This can make it difficult to implement all the initiatives you want to.
• Resistance from employees. Some employees may resist change, especially if they are used to how things have been done in the past. It’s important to communicate the benefits of the new HR strategy and get employees on board before implementing any changes.
• Inflexible systems. If your current HR systems are inflexible or outdated, it can be difficult to implement new processes or initiatives. You may need to invest in new software or make other changes to accommodate your new strategy.

Despite these challenges, it’s important to push forward with an HR strategy that will help your business scale successfully. Without one, you risk losing out on top talent, retaining low-performing employees, and dealing with high turnover.