5 Steps for Developing and Implementing an Effective HR Strategy in 2021

A must-have guide for putting strategic human resources management at the heart of your organization

The start of a new year is a perfect time for organizations, of all shapes and sizes, to revisit and revamp their overarching business strategies. Reassessing your approach to strategic human resources management (HRM) needs to be a part of this exercise. And given the many twists and turns of 2020, which are, unfortunately, still seeping into the new year, we must take what we’ve learned from the pandemic to begin charting a new course for the future.

Knowing that HR strategy plays a truly foundational role in how businesses and their workforces evolve, adapt, and transform over time, it’s critical to align around the right strategies now to propel your organization and its people forward—and in the same direction—in the future. Having a solid HR strategy in place will be the key to achieving this in 2021 and beyond, even amidst ongoing uncertainty.

• What is HR strategy?
• How to create an HR strategy?
• What does a good HR strategy look like?

What is HR strategy?

There are a lot of great definitions of HR strategy floating around, but this one caught our eye:

HR Strategy is the strategy adopted by an organization, which aims at integrating an organization’s culture, its employees, and system by coordinating a set of actions to get the required business goals. 
– Source: MBA Skool

Another way to say this might go something like: HR strategy is all about creating alignment around an organization’s people, processes, and operating philosophies. It’s a way to position strategic human resources management as the catalyst for amplifying broader business or organizational goals. The ability for organizations to define and achieve their objectives, therefore, becomes tied directly to the internal HR strategies enabling them to take shape.

From a more practical, hands-on perspective, however, HR strategy is a “long-term plan that dictates HR practices through an organization,” including recruiting, hiring, onboarding, performance management, learning and development, compensation, succession planning, etc.

This positions HR strategy as a lever through which organizations can effectively rally their employees, including senior leadership, around a unified, forward-looking vision. And while it may seem like this more operational aspect of HR strategy is mostly tactical in nature, its implications on an organization’s long-term success and even culture extend far beyond that.

Interestingly enough, the MBA Skool definition goes on to say that HR strategy “must be aligned to an organization’s mission, vision, and goals.” This essentially means that HR strategy, like any other business-level strategy, plays a powerful, yet functional role in helping organizations both create deeper roots around their reason for being (“mission”) while also working towards a desired future end-state (“vision”). Achieving this requires all of an organization’s systems, processes, and people to march to the beat of the same drum (“goals”).

Now that we’ve got that covered, it’s time to start building your very own HR strategy.

How to create an HR strategy

While there isn’t necessarily a “right” or a “wrong” way to build a successful HR strategy, there are certainly some best practices to follow. This is especially the case if your goal is to build an HR strategy that goes well beyond the ‘tactical’ to transform your organization—and its people—from the inside out. And because business-level strategies often ebb and flow alongside the world’s various social, political, economic, and cultural tectonic shifts, how organizations approach HR strategy today may be very different than how they had approached it even a year or two ago.

So to dig a little deeper into what really moved the needle today, we asked our very own HR experts to weigh in on the discussion. Here is what they’ve suggested are the five steps for developing and implementing an effective HR strategy:

1. Align to business needs

A business strategy dictates how a business will achieve its goals and grow in both the near- and long-term. An HR strategy complements this by creating the internal infrastructure that can effectively activate its people and processes to reach those goals.

It goes without saying that building an HR strategy cannot be done in a vacuum. In fact, it must cascade down from an organization’s broader business strategy and, more importantly, position an organization’s employees as the glue that connects HR strategy to business strategy.

Here’s an example of what this might look like in practice. Let’s say a company, having suffered during the economic downturn of the COVID-19 pandemic, decides to shift its focus in 2021 away from new customer acquisition and, instead, double down on customer retention in an effort to reduce churn. The best way to do this is to create an exceptional customer experience that puts ‘strengthening customer relationships’ on the top of its priority list.

Creating a great customer experience typically means having dedicated employees on-the-ground to support and nurture those relationships. So to ensure that nothing slips through the crack, especially at such a tumultuous time, this company may want to simultaneously align its HR strategy to focus more on employee retention to minimize and, hopefully, avoid any disruptions in the customer experience.

This is just one example of how HR strategy can be a true ally to business strategy—and a reminder that strategic human resources management can influence and impact an organization’s bottom line. That is, when HR strategy closely aligns to broader business needs.

HR strategy must relate to all parts of the business. It starts with listening to customers’ needs; on that basis, it designs organizations, internal processes, and impactful communication plans that align with, and support short- as well as long-term company goals. Only in doing so does HR create the conditions that enable the business and its people to be successful.

– Shana Roy, Chief People Experience Officer, Talentsoft

 

2. Identify what success looks like

As with setting any goal or objective, simply putting a strategy together is only half of the battle. It’s never a ‘one and done’ process by any stretch of the imagination. In fact, everything else you do once the ink has dried on your HR strategy is all about what needs to happen in order to drive incremental success until you reach or even surpass your stated goals.

So as you develop your HR strategy, you should repeatedly ask yourself, “What does success look like?” After all, it’s easier to build a strategy around a desired end state versus coming up with a strategic framework and then leaving the rest to chance. To help keep this goal-setting process a bit more organized, consider building your HR strategy around four key internal levers:

• Culture: How will this strategy fix, change, amplify, or even transform certain aspects of the day-to-day leadership and employee experience within your organization?
• Organization: How will this strategy optimize the hierarchical structure of your organization, refine reporting lines, and identify new job role needs?
• People: How will this strategy support the ongoing development, growth, success, and happiness of the people within your organization?
• HR Systems: How will this strategy streamline the processes used across the talent management spectrum, from recruiting to training to compensation (and beyond)?

Now that you’ve determined what success looks like, you need to identify how you’ll ultimately determine if you’ve achieved your HR goals or not. This comes down to establishing key performance indicators—or KPIs for short—and tracking progress against them regularly over the course of the year. KPIs are most often quantitative measures but, depending on the nature of your goals, can also take the form of qualitative inputs.

The University of Nottingham offers a great example of a solid HR strategy in action, wherein the university’s key HR goals—what they refer to as “aims”—are broken into a series of achievable objectives that are then mapped to well-defined measures of success (aka, KPIs).

Pro-Tip > Make it manageable

To avoid getting overwhelmed by what might feel like big strategic hurdles to overcome, we recommend breaking your strategy into more manageable chunks, like mini quarterly or monthly strategic plans. This will also create a best practice around setting aside time, either at the end of each month or quarter, to revisit your goals, update your KPIs with the latest metrics, and assess what’s working (versus what’s not)—and then course-correct, as needed.

 

 

3.Focus on collaboration

Even though you’ve taken the necessary steps to align your HR strategy to broader business goals and objectives, you still need support and buy-in from key stakeholders and other business partners across the organization. After all, HR is a lever of support for every department in an organization. How you end up achieving your strategic goals will depend heavily on every department being active participants in that effort.

In other words, you must work with stakeholders to collaborate on priorities, identify what is most important or achievable in the coming year, and then chart a clear path towards achieving those goals as well as the KPIs you’ll use to measure progress against those goals.

While strategic human resources management is typically perceived as a top-down mandate, the truth is, it can’t be fully mobilized without buy-in from the leaders and teams who will ultimately be responsible for helping HR turn strategy into a reality. Sure, everyone within an organization may agree on the broader goals set forth by the HR strategy in principle, but different departments may have different ways of reaching those objectives. Deploying an HR strategy across an organization requires an apples-to-apples application across every department and team. Anything less will create a measurement nightmare.

Even though it’s called an ‘HR strategy,’ it doesn’t mean the contents of that strategy should ever be developed through the lens of HR alone. An HR strategy impacts every part of an organization. So it only makes sense that testing it with key stakeholders, in a collaborative way, needs to be part of the process.

– Jean-Stéphane Arcis, Chief Executive Officer, Talentsoft 

4. Drive engagement through communication

In a similar vein as the above, not only do you need key stakeholders across the organization to bless your HR strategy, but you also need them to be its most active supporters. Otherwise, even the best strategies to ever see the light of day will fall flat from day one.

Not everyone in an organization needs to hear HR’s strategic elevator pitch directly. But there always are people in every department who can carry the torch on your behalf. These are the people you need to reach out to first and eventually convert into ambassadors and advocates of your strategy, vision, and properties. These are the people who can then cascade that information across their leadership ranks and down the line to their teams, ensuring that everyone is on the same page in terms of what HR will expect from them throughout the year.

Just keep in mind that everyone’s communication styles are a little different. Some people digest information like this better in a one-to-one setting (even if that just so happens to take place over a Teams video call), while others just need a detailed email to get the wheels in motion. The likely case is that you’ll end up using multiple communications channels, including workshops and even text-based chats, to create a ‘domino effect’ that eventually gets the HR strategy firmly ingrained in the minds of everyone within an organization.

 

5. Measure results in real-time

This part might sound obvious—especially after what we outlined in point number two above—but the key takeaway here is simple: Measure, measure, measure!

You’ve established KPIs in order to have a consistent way to track progress against your goals. Now you just need to make sure that regular reporting, either monthly or quarterly (or both!), on key data and analytics is part of your broader and ongoing strategic plan.

But don’t let this simply become a regular data dump that gets buried in the depths of your team’s email inboxes. Take the time to study what the data is telling you, pull together some actionable insights from it, and make a point to present your learnings regularly. Doing so will only make your HR strategy stronger and reinforce its importance among all key stakeholders.

Just remember, a strategy is simply a framework that sets a plan in motion for achieving a set of goals. But plans often change, especially in the face of unexpected circumstances—like the COVID-19 pandemic, as a fresh example. So be sure to stay nimble and adapt your strategy based on whatever new demands and changes are facing your organization in real-time. The value in measuring success is not simply to give you a well-deserved pat on the back when you achieve your HR goals; it’s an opportunity to fine-tune your strategy as you go, doubling-down on the tactics that work and phasing out those that just aren’t performing to your expectations.

Reporting on data and analytics doesn’t simply mean throwing all metrics onto a dashboard and calling it a day. No one wants to be overloaded with data. Be sure to keep your reports focused by providing only the data and insights that matter most.

– Elodie Champagnat, Director Global Presales & Product Marketing, Talentsoft 

What does a good HR strategy look like?

As mentioned above, the University of Nottingham HR strategy example is a good model to follow. It puts a cohesive strategy into a well-thought, actionable, and user-friendly framework. If you need a solid template to mirror your own HR strategy after, this is a good place to start.

But there are also a number of companies around the world that have implemented unique, engaging, successful, and, in many ways, quite notable HR strategies. Here is a handful of examples that stand out to us:

Google: The Silicon Valley tech giant is known for its engaging, yet competitive culture, one that’s focused on driving the long-term success and happiness of its employees. “As Google sees it, to hire the best talent, they must focus on building a great working culture.” And that it has certainly done, providing its employees around the world with a work environment and culture— filled with cafés, sports complexes, wellness resources, and other one-of-a-kind perks—that make it one of the most desirable places to work. But it goes beyond just offering perks alone. “Knowing that HR can make or break a company means that senior management ensures it is tightly integrated so it not only protects its employees as a high-end investment but does everything possible to make sure they have happy employees that are productive for the company.”

 

Cadbury: The brand synonymous with chocolate and other tasty confections among consumers is known, in more professional circles, for its deep commitment to its people and their families. In fact, Cadbury’s HR strategy is simple: It puts its people first above everything else, which has earned it one of the most fiercely loyal workforces in the world. However, what makes Cadbury even more unique is that, since its founding in 1824, the company has “maintained its worker village and R&D factories. The village offers its staff and their families a comfortable environment to work and live.” While living at work may not be the cup-of-tea for everyone, the company’s people-first approach in everything it does is a perfect example of how its HR strategy is aligned seamlessly with its broader business goals—employee retention being one such goal.

 

Nissan: When it comes to the automobile industry, Nissan is certainly an outlier. The company’s entire culture, built around a concept called Kaizen, empowers its employees to constantly improve, grow their skills, and make a marked impact on the business. This forms the backbone of the company’s HR strategy. “The HR practices at Nissan include transparent salary scales and full autonomy for leaders to recruit and build their own teams. It is a practice not seen in the automobile industry. But, at Nissan, it is the key to production and manufacturing success.”

 

 

 

Now’s the time to build an effective HR strategy

If you feel like your HR strategy has gone off the rails during the COVID-19 pandemic, there’s no better time than now to rein it in. As long as you follow these five steps above, you’ll be well on your way to introducing an entirely new level of strategic human resources management to your organization—one that will undoubtedly strengthen your culture, boost employee happiness, and amplify broader business goals. Not to mention, it can and will position HR as a core driver of organizational success, in ways that you may have never experienced before.

If you’re ready to create an effective HR strategy but still not quite sure where to start, rest assured that the HR experts at Talentsoft are here to help. Reach out to our team today!