Building an effective HR strategy: Definition, steps and examples

An HR strategy is a plan or roadmap for solving an organisation's top challenges through their people. It lays out initiatives to leverage human capital to assist in efforts surrounding recruitment, onboarding, performance, corporate culture and other goals.

New technologies such as AI, data analytics and automation are also shaping modern HR strategies. These are enabling organisations to implement HR strategies at a much quicker speed and scale than previously.

The purpose of a strategic HR strategy is to align the skills and goals of your people with the goals and objectives of your business. The idea is to plan out a concrete set of measures, programmes and KPIs to reach those objectives.

There is also an incredibly important grounding element to an HR strategy. For many businesses, it sets into motion the importance of people and has a trickle-down effect on programmes like candidate experience, onboarding, performance reviews and more.

For example, the team at British Rowing used automated workflows to complete HR admin tasks for the team, automatically notifying managers and telling them what to do so that the HR team doesn’t even need to be involved in any of it.

Adding automation to the entire employee lifecycle enabled them to implement important HR strategy such as:

• Establishing job grades and salary bands

• Addressing their gender pay gap

• Starting and driving a DEI action plan

• Looking at how they support their volunteers

• Improving their benefits and rewards

Successful teams require an HR strategy to help align their own goals with the goals of the business. This is important for two reasons:

1. It helps HR teams establish a seat at the table of executive discussions.

2. It showcases that HR, as a function, is designed to serve the overall business.

A human resource strategy is important because it showcases the true role of an HR or people function: to help the business through human capital. Leveraging the skills of your workforce by creating a better working environment for everyone.

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We put together this five-point plan to show you how you can start building an HR strategy in just a few steps. Here's how we'd recommend approaching things...

For example, if your organisation aims to expand globally, HR can focus on talent acquisition strategies that cater specifically to international markets. This could then be tied to headcount goals in certain parts of the world.

For instance, if your organisation is putting emphasis on innovation, consider revising your HR strategies to attract and retain innovative talent. Maybe you need to roll out an innovation or accelerator hub or host a company-wide hackathon.

As an example, if your goal is to enhance employee engagement, you can start by building programmes such as mentorship initiatives or employee recognition programs. Try to focus on those concrete measures that feel the most tangible.

You could create workshops to educate managers about the benefits of new performance appraisal methods, gaining their support in the process. Make sure to focus on new initiatives being beneficial and how they help your target persona.

To measure success, you could track turnover rates and employee satisfaction scores to measure the impact of retention-focused programs. Establish a floor, a best-case scenario and a baseline, and plot your organisation there to showcase progress.

Need a little bit of inspiration to bring your next great HR strategy to life? Based on the five-point plan above, we've got ten examples of programmes your HR team can implement to reach your goals (no matter what they are).

To solve for the company goal of hiring more talented people, your HR team launches a targeted recruiting campaign to attract top talent from top schools.

They attend campus job fairs, partner with educational institutions and use social media advertising to attract high-quality candidates.

The goal: Reduce time-to-hire and improve the quality of incoming talent.

A company-wide goal is to leverage the positive benefits of diversity and inclusion on employee engagement, satisfaction and performance.

To do this, HR forms "affinity groups" to meet regularly and provide input directly to HR and management on how the company can do better on DEIB.

The goal: Improve workplace culture and foster a more diverse workforce.

To maintain high levels of satisfaction and retention, your HR team initiates a programme of quarterly pulse surveys.

Your team runs short, anonymous questionnaires that ask employees about their experiences and perceptions.

The goal: HR can use the feedback to identify areas for improvement and strategies to increase employee engagement.

Your business is struggling with retention. Employees no longer want to work in the office, and are demanding more flexibility (or they're leaving).

HR develops and runs a hybrid working programme which seeks to boost employee autonomy by giving them the option to occasionally work from home.

The goal: Boosting employee retention and reducing regretted attrition rates.

Your business identifies the lack of a key skill. Let's take project management as an example, which is impeding the ability to complete projects on time.

HR identifies this gap and runs upskilling training for all current employees to "raise the bar" of this skill without having to open the budget for more headcount.

The goal: Employee completion of training (as a percentage) followed by the knock-on positive effects on productivity and project completion.

A goal from the executives is to boost the strength of your leadership bench (without having to invest in massive hiring budgets to bring in new managers).

To do this, HR identifies high-potential employees and enrolls them in a leadership development programme. This includes mentorship, leadership training, and cross-departmental projects to prepare them for future leadership roles.

The goal: Have a talent pool of internal candidates ready for promotion, reducing the need for external hires for critical roles.

Employee performance is becoming a massive issue for your leadership team. They want to give your workforce a shot in the arm to close out the quarter, half or year.

Knowing this, HR introduces a pay-for-performance model, where a portion of employees' compensation is tied to specific performance metrics. This strategy is communicated clearly to all employees and is designed to motivate high performance.

The goal: Boost performance and hit revenue targets.

Employee satisfaction is plummeting and your executive team is beginning to notice. Your team knows it's due to employee wellbeing trending downward.

To combat this trend, your HR team launches a wellness programme that includes discounted gym memberships, weekly yoga sessions and free healthy snacks in the office.

The goal: Track participation rates and conduct surveys to measure its impact on employee wellbeing and productivity.

Communication is faltering. Your executive notices this, and wants to make effective communication a tentpole strategy for your entire organisation.

As a way to help with this, HR implements an "Open Door Policy," encouraging employees to directly speak with managers or HR about any concerns, feedback or suggestions. They also set up a whistleblowing channel for more sensitive issues.

The goal: Fostering a culture of openness and trust, and preemptively addressing issues before they escalate.

Your executive team is wondering why new employees struggle to learn your ways of working and perform in their first three months.

In order to solve that, HR develops a comprehensive 90-day onboarding programme for new hires. The program includes orientation sessions, training modules and regular check-ins with both peers and managers.

The goal: Accelerate the integration of new employees into the company culture and operational processes, thereby improving time-to-productivity.

Streamline you onboarding programme

Personio can help your HR team build a comprehensive and automated onboarding programme that sets employees off to a flying start. Let us show you how it works and how our all-in-one HR software can benefit your entire HR strategy.

See it in action

At an employee level, HR tech integrations can support hybrid work by streamlining onboarding, tracking time and attendance and managing performance. They can also support employee mental health support by providing access to EAPs, mental health assessments, wellbeing tracking and performance analytics.

At a business level, advanced HR analytics tools enable companies to measure success by analysing vast amounts of employee data, identifying trends and gaining insights into HR initiatives.

These tools can track metrics such as employee satisfaction, turnover rates, time-to-hire, training completion rates and diversity and inclusion metrics. By analysing this data, companies can assess the effectiveness of their HR strategies, identify areas for improvement, and make data-driven decisions to achieve business goals.

HR needs to proactively reach out to top-level management and figure out how to define success. Take the initiative and ask your management team some of the following:

• What success factors and metrics drive company performance?

• How can HR help achieve those things?

• Are there other ways HR can support the management team?

Based on these answers, you should be able to derive some concrete goals. Some examples might include:

• Increase overall employee productivity

• Reduce or optimise hiring costs and ROI

• Promote sustainability or DEIB across the organisation

Take those successes and drill them down further. Determine some key performance indicators (KPIs) which you can use to interface with management. Being truly data-driven here is going to benefit your team a bunch.

Data-driven methods for measuring HR strategy include benchmarking, correlation analysis, predictive analytics, text analytics, churn analysis and ROI analysis. By leveraging these methods, HR professionals can gain valuable insights into their HR strategies.

HR software can automate the tracking of HR strategy goals by collecting data, visualising it, benchmarking, predicting trends, integrating with other systems and automating routine tasks. This helps organisations improve efficiency, make data-driven decisions and achieve their HR objectives.

Even the best measures are of little use if you can't derive any insights from them. If you also want to convince management that HR is contributing to company goals, data is your friend and partner.

Did you know that only around 25% of HR professionals use data when it comes to evaluating the success of their HR work?

To do this, work with correlations (if in one department employees are very satisfied and turnover and absences are low, and in another, they are just the opposite, then you can make a connection) and draw comparisons. Finally, create a measure for each of your measures and compare results after specific intervals of time.

The best HR strategies are only possible with HR software. That's because an HR software takes care of all the tasks that allow your team to make room for strategy.

Think about it like this, if your team is expected and wants to focus on the large-scale programmes that drive business success, who is going to focus on:

• Employee data

• Running programmes

• Managing and assigning tasks

• Reminding people to complete tasks

Beyond that, a software like Personio's can help introduce an evolving level of HR workflow automation. Take a product tour to see how Personio optimise your talent acquisition process, everyday HR management, employee development and more.