What is Human Resources Strategy?

A human resource strategy is an approach to leveraging human capital and a defined system of policies and procedures to achieve a desired outcome at a company.. That something, when strategies are effective, is tied to meaningful and measurable business, growth, and employee well-being metrics. 

As Michelle Hague, HR manager at Solar Panels Network USA, explains: “Human resources strategy is the process of aligning HR policies and procedures with the overall business strategy.” That alignment, of course, is critical. Achieving it, says Hague, requires first understanding the company’s goals and objectives and then creating programs and initiatives that will help to achieve those goals.

Why is human resource strategy important?

HR strategy spans the entire employee life cycle with a focus on ensuring that employees have the information, resources, skills, and support to do their jobs effectively.

It encompasses all organizational activities related to recruiting, selecting, staffing, retaining, motivating, rewarding, compensating, promoting, supervising, evaluating, disciplining, terminating, transferring, outsourcing, and other functions to support business goals.

That may sound like a lot, and it is.

Importantly, a great HR strategy isn’t just about making HR better. It must also be focused on aligning people with the organization’s strategic plan and business objectives. HR strategy also isn’t just within the purview of the HR department—it belongs to the entire organization from senior leaders down to line managers and supervisors.

According to SHRM, the best human resources strategies are created for specific jobs or departments, rather than as a blanket approach for an entire organization. Because of that, it’s possible that companies will have multiple human resources strategies in place at any given time.

Yes, HR leaders will play an important role in helping the organization craft and implement HR strategy, but it takes a team to make it happen.

What are the best human resource strategies?

The best human resource strategies are those that help companies achieve their goals and objectives. They are forward-looking, which is especially critical in today’s fast-paced business environment.

The best human resource strategies today are focused on workforce planning, employee engagement, and training and development, Hague says.

Effective workforce planning, says Hague, “can help to avoid situations where the company is understaffed or overstaffed, both of which can lead to increased costs.”

7 human resource strategy best practices

To achieve success—and results—from their human resource  strategies, HR leaders need to follow a number of best practices to help them maintain alignment, monitor and measure results, and make continuous improvements based on people analytics tied to business outcomes.

Here are seven human resource strategy best practices to keep in mind.

1. Understand business strategy.

Without a thorough understanding of the company’s business strategy—its strategic initiatives, goals, and objectives—it’s impossible to create an HR strategy that will achieve desired results.

HR leaders should be part of the planning process and integrally involved in the establishment of goals and objectives. This ensures deep understanding and increases the likelihood that HR-related decisions are aligned with business objectives.

2. Conduct a needs assessment.

Once HR understands where the business is headed, it’s important to assess what programs currently in place can help achieve those objectives and where gaps may exist. A needs assessment will help determine what human resource programs and initiatives will be necessary to achieve business goals and objectives.

3. Create an action plan with clear goals.

You can’t measure and monitor results if you haven’t established clear and measurable goals.

For example,Gauri Manglik, CEO and co-founder of Instrumentl, an institutional fundraising platform for nonprofits, says that if you want to improve employee retention rates then you should set goals around this metric. “This way everyone knows what success looks like when it comes time for annual reviews, or quarterly meetings with senior leadership teams.”

If this isn’t done, Manglik says, “there’s no way for anyone involved in these discussions—including yourself—to measure whether or not progress has been made over time.”

4. Assign responsibility for achieving results.

Accountability is key in achieving results. That accountability can be spread across departments, or individuals, but it’s important to identify where responsibility lies.

Wayfair, for instance, is known for putting DEI at the forefront of its talent strategies—and getting tangible results from their efforts. Leaders at Wayfair are engaged in these efforts, says Emily Yu, Wayfair’s associate director of people analytics. They have access to customized diversity, equity, inclusion dashboards which, says Yu, give them the opportunity to “dive into the data and understand where they really need to invest more at that local level.”

5. Communicate broadly.

HR strategy—and results—should be communicated broadly. Employees have a stake in the success of the company and play an integral role in helping the organization achieve its goals and objectives. They can only do so, though, if they know what those objectives are and how successful the organization is at achieving them.

Having access to data at their fingertips can empower business leaders to get involved and better understand their role in driving results. Experian, for instance, made a big impact when it rolled out its people analytics solution to 400 users in its HR function—arming them with the data and information needed to successfully communicate with business leaders.

6. Celebrate successes.

In a fast-paced business environment it can be easy to simply continue moving forward, even after milestones have been achieved. Resist this temptation! Take time to celebrate successes in both formal and informal ways, recognizing the impact of the efforts the HR team and others have made.

7. Use data to drive adjustments to future strategy.

Being able to clearly see ahead, and build a path forward, is key to effective HR strategy. Running a truly data-informed HR strategy allows HR leaders to discover opportunities and get deep insight into the drivers of business success. A wide range of HR metrics can be used to monitor progress.

5 examples of human resource strategies

As more and more companies work to formalize their HR strategies in alignment with desired business outcomes, best practices are emerging. 

Here are five:

1. Capitalizing on communication. Uber has made a concerted effort over the past several years, and especially during the pandemic, to refine their HR strategy to help attract and retain talent. Michael Stewart, Uber’s Head of HR EMEA says that listening is a critical part of that process. “We’ve done a number of engagement surveys to understand how people are coping working from home and then reacted accordingly,” he says. “For example, we’ve been encouraging people to take more time-off, to recharge and combat the extra pressure and feelings of burnout over the summer.”

2. Democratizing data. Coast Capital recognized that in order to prepare its workforce for the future they needed access to data, and not just senior leaders—they scaled people analytics out to their entire team.

3. Creating the right hybrid work model. At Panasonic North America, Lydia Wu leveraged data to help drive decisions about where people should work as the pandemic eases. “Being able to statistically prove the different levers around potentially bringing people back to work for one day of the week—what would that look like from a burnout perspective? What would that look like from a turnover perspective? And then truly being ale to make a case to our company leadership.”

4. Having fun to spur innovation. At LEGO, an environment of fun and innovation drives engagement and better business outcomes. As the HRCI Learning Center reports: “At LEGO, the same spirit of creativity and imagination that goes into the company’s products is also a major part of the company’s high-performance culture. It’s what helps the company drive success in the global marketplace, according to LEGO’s human resource management leaders.”

5. Using analytics to drive a better employee experience. At eBay, “analytics really underlies all of our employee experience work,” says Scott Judd, senior director of people analytics. The company, says Judd, makes sure that “there are good metrics aligned with every initiative that we have so that we know how we’re tracking and how we can do better.”

HR strategy is important to every company—but every company will employ different strategies based on their unique goals and objectives, and the unique needs of their workforce. Regardless of strategy, though, having a clear and strategic focus on people analytics can help HR stay aligned with business needs and ensure better results.

Human resources strategy FAQ 

What is human resources strategy?

A human resource strategy includes the system of policies, procedures, and strategies that a company uses to maximize the impact of their human capital to meet strategic goals for the organization. It includes strategies for hiring, performance management, talent development, and compensation. 

Why is HR strategy important?

HR strategy is important because it ensures that all of human resource activities are aligned with the company’s long term strategy. An effective HR strategy can ensure alignment within the HR team, improve the impact that team has on organizational outcomes, and positively impact employee experience, development, and retention. 

How do you develop an HR strategy? 

• Understand your business’ strategy

• Conduct a needs assessment 

• Create an action plan with clear goals and success metrics

• Assign responsibility for achieving results, and roles 

• Communicate the plan broadly 

• Celebrate successes 

• Use data to drive adjustments and improvements