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    10 Foundations of a successful HR Strategy in 2021

    September 16, 2021

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    HR strategy
    Ratnika Sharma
    Written By
    Ratnika Sharma
    Topic
    HR

    Every business, irrespective of its size, needs to have some HR strategy. It goes for a business that employs one or even a hundred people.

    What is an HR strategy?

    HR strategy is defined as an organization's structured approach to managing its workforce to align with all the business goals.

    A good strategy dictates how the HR process runs, right from recruitment to succession planning. It is also not stuck in its ways, meaning that a strategy can rise to meet the evolving HR industry's requirements.

    It also means that a successful HR strategy can pivot the business towards being more competitive.

    Types of HR strategy 

    1. Recruitment

      A recruitment strategy involves laying out a detailed plan for what positions a business needs to hire for and when that hiring will get executed. It also encompasses why that strategy works best and what the business will gain from filling that role.

      The critical aspect is how recruitment will get done, whether the business will leverage internal resources to fill a position or hire from outside, from a college campus, etc.

    2. Learning & Development

      Although many organizations have separate L&D teams, they still come under the purview of the HR department.

      The purpose of a well-laid out, smartly scheduled learning and development strategy are to ensure employees are at the skill level the business needs. The L&D strategy is an excellent way to have oversight on training objectives. More importantly, it helps visualize how these strategies act as a structure to support its corporate strategy.

    3. Performance Appraisal

      Setting clear performance appraisal strategies allows a business to measure if human capital input meets the business's overall strategy.

      It doesn't just focus on the excellent performance or the poor performance of individuals. It also allows an insight into if current strategies are returning the desired outcome.

    4. Compensation

      It is a vital part of any successful HR strategy. Of course, financial compensation and benefits are a significant part of it. Compensation strategies also include allocating an HR budget, setting salary increments, pay grades for different levels, rewards, and recognitions budget allocation, legal compliance, and of course, creating a structure to manage all these elements.
    5. Succession Planning

      A good succession planning strategy involves selecting and developing HR resources to take up leadership mantles at an organization. It is vital at every level. Too often, a business becomes dependent on certain employees and struggles when a supervisor or a manager either steps into another role or leaves the organization to further their career.

      Developing talent to take on these responsibilities is a good way to ensure consistent HR operations all the time.

    Foundations of a Successful HR strategy

    1. Involvement

      Every single individual that makes up the HR department has to know what the strategy is. Some confidentiality may surround certain aspects, which may not allow complete access to all HR employees.

      They still need to be given a clear overview of what the organization needs from the HR strategy, the more invested your HR department is in the strategy, the more driven they are to impact the outcome.

      Communicating the HR strategy plays a crucial part in its success.

    2. Management Approval

      It seems obvious. However, having management support HR strategies at every level can impact its effectiveness.

      Presenting the management with a structured strategy with measurable goals gives them a better understanding of what the HR team intends and what the business can gain.

      A clear-cut HR strategy also pushes management to hire the right HR officers and managers to execute the plan.

    3. HR Budget

      There is no end to examples of how poor budgeting has led to the downfall of an HR department. As a result, departments have immense pressure to keep costs low, now more than ever.

      A cornerstone to the foundation of successful HR is a clear, concise, and inclusive budget. The budget has to include every aspect of managing human capital.

      Using data and analytics is good. However, it is required to be able to present a budget. The management needs to know what will be achieved with this budget and have a clear eye on the expenditure's returns.

    4. HR Initiatives

      Too often, we see a mix and match of HR initiatives that, on the outside, sound great. However, in a space where information has become easily accessible and an increased pressure to remain competitive, a common mistake is to launch HR initiatives that don't necessarily align with the business's HR strategy.

      For it to be successful, the strategy should get created, and then HR initiatives that support the strategy at different levels have to be implemented.

    5. Incentives

      We all know that people work harder when they have an incentive to do so, for more pay, better rewards, or various other sorts of incentives.

      You cannot simply throw incentives out there. There has to be a clear line of sight as to what those incentives are for. It is important from an employee's perspective but so much more important from an organization's perspective.

      A clearly defined incentive strategy that works hand-in-hand with the HR strategy is a mandate that every business should outline.

    6. Monitoring

      An HR strategy must include a method of monitoring that strategy. While a great strategy takes care of many things, there has to be a way to take care of that strategy.

      Keeping an eye on the strategy's success is needed to understand if it works and what needs to be changed. With a clear understanding of the strategy's performance, it is much easier to make the changes required to make it more successful.

    7. Measuring

      It cannot get stressed enough. There are businesses with excellent strategies in place, and they seem to work wonders. However, when it comes down to an HR audit, then questions arise. Having clear metrics that measure the goals of the strategy is just as important as the strategy itself.

      Without specific Key Performance Indicators in place, it can be challenging to understand the impact of the HR strategy.
    8. Vision

      A successful HR strategy is a long-range plan. However, it does also have to account for short-term goals as well as medium-term outcomes.

      Keeping the long-term in view and adapting to everything that happens during the duration of the strategy is vital. It isn't always wise to wait until it's time to review an existing strategy at the end of the year and have plans in place for what kind of HR strategy is required for the next step of your business's growth.

    9. Analytics

      It is mentioned as part of the measuring of the strategy. The importance of analytics has never been more critical than it is today.

      Having the right tools at the HR department's disposal is vital to ensure that they can execute their jobs effectively.

      Analytics have to be used and integrated at every level to ensure the foundations of the HR strategy are solid.

    10. HR Compliance

      It is given in most cases. However, the importance of HR compliance can get overlooked.

      Complying with labor regulations and legal issues can be cumbersome. However, most of these regulations are put in place to safeguard employees and the business.

    Implementing an HR strategy in your organization

    It can be tough to know what kind of HR strategy makes the most sense for your business. It can be even more challenging to implement it successfully.

    We've talked about how important it is to communicate the strategy to HR. To ensure it get implemented, you have to get your employees to understand the strategy. It is especially true if you are taking on a radical new strategy, but equally important no matter what your strategy is.

    You want your employees to be able to work towards achieving the HR strategy's goals. It would help if you had them know what it is and know how they can contribute.

    In many cases, new strategies can mean that there are going to be some changes. So it isn't always enough to put the information out there. You also have to prepare your employees for the changes and align them with the strategy.

    It goes back to them understanding it. If the employees can understand it, they can adapt to the individual changes required to make the plan work as a whole.

    A vital part of the new strategy that has to get accounted for is taking certain aspects out. Yes, a business must be willing to cut off the activities that don't contribute towards the strategy's success. However, it is surprising how often these activities and behaviors stem from a managerial level.

    The entire focus of this piece has been HR. The crux of all this working, however, is in cooperation. Especially in larger companies, it can be observed that interdepartmental relations are sometimes strained.

    It must be curbed and remedied. The HR strategy involves every single person in the organization. Therefore every single person in the company must contribute towards the success of the HR strategy.

    Every department has a plan, and there can be immense pressure to meet these targets. Therefore, each department's goals are aligned with the HR strategy to ensure that everyone is on the same page.

     

    An Example of a Successful HR Strategy

    Google is a great example and one that has been cited numerous times and for a good reason.

    Yes, they have perks that no one else offers and excellent facilities. However, the strategy isn't just a publicity stunt. It is a central part of their HR strategy.

    How and why did they choose such a strategy? Well, it is pretty simple. Data. As you would expect from an organization that has thrived on data, they have used their access and knowledge to create excellent HR strategies.

    They have an ongoing drive named Project Oxygen, a study into practices that pinpoint and measure management practices and help nurture the right kind of behavior.

    The process involved highly complex data analysis. However, the outcome was that they zeroed in on eight management practices that employees found to be good and then quite trained all other management professionals to replicate that behavior.

    While the example is of a business giant, the takeaway is that businesses can accomplish wonders in the HR department with the right kind of data retrieval and analysis.

    Please do some research into how big businesses tackle their HR strategy. The results are inspiring. Take a look at Netflix, Cisco, Dell, and Hilton, to mention a few.

    Conclusion

    Investing the time and effort and possibly the required capital in a well-structured HR strategy is vital for any organization.

    It just doesn't do to sit back and say that we will cross that bridge when we get there. No matter the size of your business, create a long-term strategy that allows the business to see its goals achieved.

    Let's say you are the CEO of the company. Sure, you are young and full of ideas and potential. What happens in twenty-five years when someone has to step in to take your place? It would help if you kept the dream alive.

    A detailed, long-term plan is vital to ensuring that your organization has a strong foundation.

    These ten foundations of HR strategy will help you create the right strategy.

    Gartner
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