When it comes to business, there’s a strategy for just about everything — product differentiation strategies, growth strategies, marketing strategies. Almost every division, department, or unit of a business has one. But there’s one strategy that’s often overlooked: the HR strategy.
Studies have shown 64 percent of organizations are operating without an HR strategy in place, putting them at risk for issues like low employee retention, poor productivity levels, skills shortages, and more.
There are several different reasons why this occurs. Many startups experience unexpected growth early in their development, for instance, and are too busy meeting demand to focus on strategic HR planning. Other companies hire an HR professional thinking they’ve covered all their bases, not realizing that having an employee complete on-going HR tasks isn’t the same as having a formal strategy in place.
Whatever the case may be, having a greater HR strategy in place that aligns hiring and staffing initiatives with the overarching mission, vision, and values of a business is absolutely essential. Keep reading to learn how you can build an effective HR strategy plan!
What is a HR Strategy?
Any formal document that details how a business plans to attract, hire, retain, and best utilize its team members to achieve its overall performance goals can be categorized as an HR strategy. These documents serve as a tactical plan for both HR departments and executive-level leadership teams, keeping all key stakeholders united with a common vision for moving forward.
Why is Strategic HR Planning Important?
We’ve briefly touched on a few of the negative outcomes that can result from not having an HR strategy plan. Let’s take a closer look at how having one in place can benefit your business.
Here are the most notable advantages of strategic HR planning:
1. Fewer Skills Gaps
Every business needs qualified professionals who can complete the essential operational functions required for the company to achieve its goals. When a position remains vacant for too long, or existing team members bring some skills but not others, the business is forced to operate with an impediment in terms of efficiency.
It’s important to remember that 87 percent of businesses are aware they either currently have a skills gap, or will in the very near future. This is concerning given the talent shortage and skills gap in the U.S. is expected to total a loss of $8.5 trillion by 2030.
Companies can curb being impacted by these statistics with a formal human resource strategy that details not just how it will attract top-level talent, but how it can train and support existing employees so they can expand their skill sets and potentially advance to much-needed higher positions.
2. Stronger Competitive Advantage
Your competitors can implement similar software programs, streamline manufacturing processes, and increase their marketing budget. What they can’t do, however, is replicate the people who work for your company — and that’s what makes strategic HR so valuable in terms of positioning your business as a major industry player.
The more qualified, experienced, passionate, and dedicated your workforce is, the more difficult it will be for similar brands or businesses to replicate your success. The catch? You have to have a strategy in place for identifying, attracting, and retaining these key professionals. Your plan should detail initiatives like enhancing your employee experience and strengthening your wider workplace culture, so people not only want to work for your company, but remain a loyal team member for years rather than months.
3. Reduced Employee Turnover
It costs employers approximately 50-60 percent of an employee’s salary to replace them, and that amount can increase up to 150 percent for senior level positions. Ultimately, this accounts for tens of thousands of dollars and contributes to broader workflow disruptions — which is yet another reason to prioritize strategic HR planning.
Companies should be cognizant that 54 percent of all voluntary resignations are preventable, validating the benefit of having a strategy in place for retaining and engaging employees. HR strategies provide clear, actionable guidelines that ensure team members feel heard, prioritized, and supported through all stages of employment with a company, reducing the likelihood of resignation and establishing a happier workplace environment.
How to Develop an HR Strategy Plan
Not sure where to begin? It’s always a good idea for leadership teams to have a foundational knowledge of strategic HR. Let’s look at some fool-proof strategies for human resource management.
Here are a few key steps to keep in mind:
1. Identify Current Gaps
Before all else, you need to determine which skills your company is lacking, which positions need to be filled immediately, and which positions are likely to be required in the near future — and your decision can not be based on opinion alone. You’re going to need to conduct interviews with existing staff members to gain insight into how various departments or teams are functioning. You’ll also need to dive into performance data and pinpoint productivity bottlenecks, so you can make an educated decision about where your human resources can best be allocated.
The secret to any successful skills gap analysis is quality research. Take the time to conduct competency assessments and to confirm areas of need prior to making a hiring decision. This will ensure you fill positions with the best possible candidates.
2. Clarify Your Objectives
Strategic HR goals must be set with intention and careful consideration. Many goals sound good in theory but aren’t actually attainable when all applicable factors are taken into account. Your executive leaders, managers, and supervisors need to consider time constraints, financial restrictions, and a wide range of other potential hindrances that could stand in the way of reaching a particular goal.
You’ll also need to clarify who is responsible for the specific tasks required to meet an objective. Who is capable of completing these tasks? Who has the time or ability? What timeline can they realistically commit to?
And lastly, you’ll need to define your process for measuring progress. What indicators of success will you be looking for? What milestones should be reached? All of these details will reduce confusion for your team and ensure your plan is executed as needed.
3. Seek Out HR Strategy Examples
There are many examples of HR strategy businesses can pull from. Don’t feel pressured to start from scratch! Look to companies that have already achieved the type of success you’re looking to create within your own organization and adapt their approach to meet your own needs.
Take the multinational telecommunications giant AT&T— they established AT&T University, an employee training program, which supports existing team members pursuing professional advancement. The online platform offers free courses and certifications for key skills like leadership, management, data engineering, and more. Could your company implement a similar type of learning platform for your employees?
Dedicate time to researching what other industry leaders are doing to attract and retain talent. Read positive reviews from their employees. Look at what they’re doing differently. There’s almost always nuggets of inspiration to be found — you just have to look for them!
4. Prioritize Action Items
Trying to scale your business too quickly can be just as detrimental as having vacant positions. It’s important to prioritize HR activities, especially those pertaining to hiring, to ensure stable and sustainable growth. You’ll need to analyze the various stages of your hiring process, look at how long each phase takes on average to complete, and confirm which positions are most necessary at a core level. With this information, it’s much easier to determine which hires should be prioritized first and which ones can wait a little longer.
It’s also important to consider whether or not an existing employee is capable of moving up to fill a senior level position. Oftentimes, hiring for entry or mid-level positions is easier than hiring for managerial ones. It might be more efficient to train and promote a current team member, and seek a replacement for their current position, than to find a senior level candidate.
All of these factors will dictate which tasks need to be completed first and allow you to fill gaps quickly.
5. Document the Details
When in doubt, document it. This is a great piece of advice to follow when engaging in strategic HR planning. When strategies are missing key points, it forces HR personnel to loop back and seek out additional information (wasting your time and theirs). Additionally, vague strategies leave guidelines open to interpretation, which can cause tasks or protocols to be overlooked or changed without approval.
It’s always in a company’s best interest to be specific and exhaustive when producing an HR strategy. Whether it’s recruitment practices, learning and skill-building programs, onboarding protocols, or employee pay structures — every component of your strategy should be documented precisely and with all the necessary fine points.
Remember, many HR disputes arise due to unclear policies or a lack of guidelines. Detailing your approach to addressing employee complaints and setting firm standards of conduct can save employers a ton of hassle over time. An HR strategy that’s crystal clear is the best defense against many issues involving employees and interpersonal relationships in the workplace.
Finetune Your Strategic HR Planning with ProService
At ProService, we help our clients define their standards for a multitude of HR-related functions and put together a comprehensive strategy. We also put the technology and processes in place to monitor the performance of their strategy, so they can evaluate along the way and make adjustments when necessary. But most importantly, we make it our job to know everything there is to know about your business, so we are capable of making personalized service recommendations and implementing the very best solutions available.
Ultimately, we want our clients to feel confident in the future of their business. And to achieve that, we commit ourselves to being a reliable and innovative resource. We’re here to problem-solve, strategize, and execute on behalf of our clients, so they can focus on scaling their operations and exceeding their greater business goals.
If you’re ready to advance your business with a team of passionate and highly knowledgeable HR professionals, we’re the HR services provider for you. Interested in learning? Book your free 15-minute consultation today!