HR strategy expert guide (benefits & 7 steps)

The people dimension of work is too complex to manage under a general business plan. That’s why you need a separate strategy for human resources. 

In this article, we’ll take a look at what an HR strategy is, why companies need one, and detailed steps for creating your own effective yet flexible HR strategy. We end with a glimpse into the future: four bold predictions on HR strategy changes over the next five years. 

What is an HR strategy?

An HR strategy is a comprehensive plan that aligns a company’s human resources (HR) management with its strategic goals. It covers all stages of the employee life cycle. 

Key elements of a strategy for human resources include:

• Optimizing talent acquisition, employee development, and retention

• Building a positive workplace culture

• Achieving satisfactory levels of employee engagement (especially in environments with many remote workers)

• Implementing effective performance management systems 

For example, let’s imagine that a technology firm wants to implement an HR strategy that focuses on attracting top talent in software development. To hire top talent, the company includes competitive salaries, flexible working conditions, and ongoing training in cutting-edge technologies as part of its HR strategy. 

This kind of HR strategy helps fill immediate gaps in the business. Plus, it supports long-term goals like growing into an industry innovator.

Why is it important to have an HR strategy? 

HR departments are often looked at as stand-alone parts of a business. Some people might think HR roles are limited to hiring, payment, and performance management.  

In reality, HR experts have a much bigger role throughout the business. But they do need a clear HR strategy to fully play their part for the organization. Here are some reasons why it’s important to have an HR strategy in place:

• A well-articulated HR strategy serves as a bridge between an organization's overarching goals and its human capital. A good HR strategy helps experts manage human capital effectively to reach company goals.

• Integrating HR processes and policies with business strategies means organizations can build a strong, cohesive company culture that reflects their values and mission. A healthy company culture is foundational for employee engagement — which is critical since 17% of US employees are actively disengaged at the workplace.

• Well-defined strategies in HR provide clear direction for HR professionals. Concrete goals motivate HR experts to plan in diverse ways to reach business goals.

• Proactive HR strategies in talent management — from recruitment to skill development and employee retention — make it possible for a company to always have the skills and expertise that it needs to navigate market changes and stay innovative.

• Through strategic workforce planning, HR can also anticipate future talent needs and create succession plans that minimize disruptions in the workforce.

An HR strategy is not just about managing people but also leveraging human capital in a competitive marketplace.

What are the benefits of an effective HR strategy?

An effective HR strategy goes beyond basic talent management. Let’s take a look at the main benefits of an effective HR strategy:

Increased employee satisfaction

A strategic HR approach addresses employees’ broad range of needs and aspirations. It offers tailored development opportunities, plus recognition and rewards systems that resonate with employees. Personalized HR strategies can reduce turnover rates by helping employees feel valued and see a clear path for growth within the company.

Better employee performance

One of the ripple effects of high employee satisfaction is a boost in performance. Engaged employees are typically more productive, innovative, and committed to excellence. All these benefits directly contribute to a company’s success.

Strategic recruitment

An effective HR strategy can improve the quality of new hires through strategic recruitment processes. Alignment between the employees' capabilities and the company's needs means new employees fit in well right from the start. This maximizes performance and minimizes the costs that result from poor hiring decisions.

Improved organizational reputation

Beyond direct benefits, an effective HR strategy can improve a company's reputation as an employer of choice. A strong employer brand is beneficial to companies when attracting and retaining top talent in a competitive job market.

Greater organizational resilience

A solid HR strategy also lays the groundwork for more organizational resilience and adaptability. This is because an effective HR strategy supports a flexible and inclusive work environment where diverse ideas and perspectives can thrive.  In short, an HR strategy is not just a set of policies. It’s a dynamic framework that helps propel an organization toward its goals through its most valuable asset: people.

How do you create an effective HR strategy for your company?

Creating a solid HR strategy is less complicated than you might think. Tailor the steps below to develop an HR strategy that’s helpful for your unique business needs.

1. Align your HR strategy with the company’s business goals

Begin by reviewing your company's strategic objectives. How can HR initiatives directly impact ‌organizational-wide goals? Focus only on the ones where HR can make an actual difference. 

As part of this step, consider formulating a mission statement specifically for the HR team. 

For example: “Our mission is to select and hire top talent and create a harmonious workplace culture where all employees prosper, thrive, put forth their best effort, and consistently achieve company goals.”

A statement like this can inspire the HR department to embrace the strategy you are developing and run with it.

2. Conduct an analysis for the HR team and staff

Systematically assess your current HR capabilities, practices, and resources. What are the strengths, and where, if any, are the gaps?

Also, evaluate the existing workforce in terms of skills, engagement levels, and performance. Use surveys, interviews, and data analytics to gather these insights if you don’t already have this data.

3. Define strategic HR objectives

Define clear, measurable HR objectives or high-level goals based on your current state analysis. Think of areas like employee satisfaction levels, turnover and talent acquisition success rates, and career and leadership tracks for the workforce.

Make sure these objectives are SMART (specific, measurable, achievable, relevant, and time-bound). Here’s an example of a SMART goal for an HR strategy related to employee engagement levels: 

"Within the next year, increase the employee engagement score for both in-office and remote employees from the current 65% to 80% by implementing a comprehensive engagement program that includes monthly team-building activities, quarterly feedback sessions, and a recognition system to celebrate employee achievements. This goal supports the broader organizational objective of reducing turnover and enhancing productivity, with progress measured through annual employee engagement surveys."

This HR goal includes all the SMART components:

• Specific: The envisioned engagement program includes monthly team-building activities, quarterly feedback sessions, and a recognition system to celebrate employee achievements.

• Measurable: Raise the employee engagement score from 65% to 80%; HR will measure this through annual employee engagement surveys.

• Achievable: This goal suggests that the HR department has the knowledge and experience to implement activities like team-building and feedback sessions or knows how to acquire the necessary skills.

• Relevant: This goal specifically supports the broader organizational objective of reducing turnover and enhancing productivity.

• Time-bound: Within the next year.

A good rule of thumb is to focus on three to five key goals. This makes the strategy more manageable for the HR team and the other stakeholders involved. It also allows for focused effort and adequate resources for each goal so that HR can give each one the attention it deserves.

4. Develop action plans for key HR areas

Add action steps to each of your strategic goals. This level of specificity in your action steps makes it much more likely that your strategic goals will‌ be implemented.

Here are some examples of action plans for your HR strategy:

Talent acquisition:

• Design recruitment strategies that target the skills and qualities needed for the company’s future. 

• Together with the marketing team, consider employer branding initiatives to attract top talent.

Employee development: 

• Create a comprehensive training and development program for upskilling and reskilling employees.

• Implement leadership development initiatives to prepare future leaders for roles with more responsibility at the company.

Performance management: 

• Establish a performance management system that sets clear expectations and includes continuous feedback options.

Employee engagement: 

• Develop a recognition and reward program to improve employee engagement.

• Put a more comprehensive wellness program in place that speaks to the different needs of both on-site and remote employees.

• Develop effective strategies for including remote employees and international contractors in the company culture.

• Analyze exit interviews to determine areas for continuous improvement in engagement levels.

5. Formulate your HR strategy

You now have all the ingredients for a top-notch HR strategy. The next step is to put them together in a strategic plan for the department.

As you lay out this plan, it’s helpful to work from general to specific. Here’s a good order:

• The HR department’s mission and vision

• Key findings regarding the most important HR functionalities to include in the plan

• Overarching strategic HR objectives

• For each objective:

  • Action steps

  • Person(s) responsible

  • Detailed timelines

  • Metrics

6. Implement the strategy

Ample communication across the organization is key to smoothly rolling out your HR strategy. Develop a communication plan that uses multiple channels (such as company-wide meetings, internal newsletters, and the intranet) to share the HR strategy with your company’s workforce. 

As you share the relevant strategies, make sure to explain the importance of each individual's contribution toward your new HR objectives and how those efforts align with the broader company goals. 

It’s also good practice to invite feedback and questions from ‌employees to increase their sense of ownership and stimulate their willingness to participate in the collective effort.

7. Monitor, evaluate, and periodically adjust your HR strategy

Use your selected metrics to track the progress of your HR strategy against its objectives. Project management tools can help you stay on top of this effort.

Regularly review the strategy’s effectiveness by collecting feedback from employees and analyzing HR data. Ask yourself whether the company’s performance is benefitting from the goals and action steps laid out in the HR strategic plan.

Be prepared to make adjustments to the strategy based on feedback and changing business needs. Continuous improvement should be a core aspect of your HR strategy.

5 best practices for perfecting your HR strategy 

Here are some ways to make your HR strategy the best it can be.

1. Involve the right team members from the beginning

Include key stakeholders and team members from other departments from the start. Gather the insights you need to align the HR strategy with specific organizational needs.

Collaboration between HR, department heads, and executive leadership is crucial to tailoring your HR strategy to the broader business objectives. Establish a cross-functional team to contribute to the strategy development process so that you can be sure your HR strategy resonates across the organization.

2. Set clear, measurable goals and measure outcomes

Define clear, measurable goals for each part of your HR strategy. These goals should be directly linked to the company’s business outcomes to demonstrate the value and impact of your HR initiatives.

Specifically, use key performance indicators (KPIs) and metrics relevant to talent acquisition, employee retention rates, training effectiveness, employee engagement scores, and overall business performance.

3. Invest in technology and HR software

Use advanced HR software and technologies to simplify your HR processes. From payroll and benefits to compliance, a strong HR platform helps you manage your global team efficiently.

Remote HR Management is specifically designed for companies with remote team members around the globe. Invest in a good HR solution to track your HR metrics, refine your recruitment strategies, and personalize your employee development programs.

4. Be flexible and adaptable

Be flexible in your HR strategy as technologies and your workforce dynamics change. It’s important to stay informed about trends and challenges in your field and be ready to pivot as needed. This sort of agility will help your HR strategy remain relevant and effective over time.

5. Prioritize employee engagement and well-being

Engaged employees are more productive, innovative, and loyal by nature, so make sure to include initiatives for boosting employee engagement and well-being in your plan.

Implement programs that support a healthy work-life balance and diversity. Recognize employee achievements and address mental health and well-being. Prioritizing employee engagement can have a strong positive impact on your HR strategy.

How will HR strategies change in the future?

Technological advancements, evolving or new work models, and globalization all affect HR strategies. Here's how HR strategies are likely to change over the next five years.

1. Integration of more AI and machine learning

Artificial intelligence and machine learning will increasingly automate routine HR tasks. HR professionals will continue to focus on more strategic aspects, like talent development and employee engagement. 

Predictive analytics will play a key role in identifying future talent needs, flagging potential leadership gaps, and even forecasting turnover rates. These developments will necessitate more proactive HR planning, including high-level strategies to keep up with technology.

2. More remote and hybrid work models

22% of the US workforce is estimated to work remotely. As companies continue to expand and refine their remote work policies, HR strategies need to adapt to manage hybrid workforces. This includes developing remote-friendly policies and investing in effective, easy-to-use technologies that make collaboration and communication effortless and more productive. 

Above all, HR experts need to develop engagement initiatives that bridge the physical distance between team members. In that way, everyone will feel like they’re part of the team, no matter their location.

3. Employee well-being as a strategic priority

Future HR strategies will focus more on holistic employee well-being as a strategic part of HR work. Companies will likely integrate more comprehensive well-being initiatives into their core HR strategies. This is because leaders ‌recognize the direct impact of mental health on employee productivity, engagement, and retention.

4. Increased globalization on HR departments

With teams becoming increasingly international, HR strategies will need to focus on developing inclusive cultures that embrace diversity. HR leaders also need to manage teams across different time zones and cultures. 

This global perspective will require a more nuanced approach to everything from global payroll to customized benefits packages that match different employee needs.

These predictions underscore the need for HR strategies that are not only adaptable and technology-driven but also human-centric. You can’t build an effective HR strategy without recognizing the diverse dynamics of a global workforce. Given these future trends, HR professionals‌ should build an HR strategy that truly focuses on their employees.

Support your HR strategy with Remote HR Management

As technology and globalization reshape how we work, HR strategy requires the right HR software to guarantee success. If you are crafting an HR strategy for your global team, consider partnering with an expert in global HR. 

Remote’s all-in-one global HR solution is built to help you hire, pay, and manage top talent compliantly with local laws. Whether you want to hire one employee or contractor in another country, or hundreds in multiple countries, Remote HR Management supports all you need through a single platform.

To learn more about how Remote can help you actualize your HR strategies, chat with an expert today.

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