Glancing around the company break room may cause a startling revelation: your company has grown. There have been signs – sales are up, the number of clients has increased and you’ve had to hire extra help to handle all the work that you’ve been doing. If you’re not careful, the company will suddenly jump from “small” to “medium” size and you will be hard pressed to find a decent parking spot in the morning. Before you realize what’s happening, you need a full time person just to handle the staffing issues that arise.
It seems simple enough to ‘play it by ear’ and just assign one person the task of handling any human resource needs. Unfortunately, though that method may work in the short term, it will come back to haunt you in the future as your company continues to grow. To effectively manage the growth and success of your company’s staffing needs, you need to design and implement a human resource strategy. Establishing an HR strategy before you actually need one will ensure that your company continues to run efficiently and smoothly. What is the best way to develop a human resource strategy that works?
In this article, we look at 1) how to define a company vision, 2) establishing the HR department’s role, 3) developing a company overview, 4) investigating company needs, 5) evaluating HR processes, 6) implementing the plan, and 7) measuring success.
DEFINE THE COMPANY VISION
To begin with, develop a concrete vision for the company. Perhaps you have already established a company mission statement, or you have a general idea of the direction the company is going. It is crucial to the development of a human resource strategy to have a clear vision for the company. Knowing where the company is headed will give guidance to how human resources can assist the company in reaching its goals. Communicating those goals to the human resource department will help provide concrete methods that the HR strategy can use. By solidifying the company’s short and long term goals, the HR strategy can be tailored to best help meet those goals.
The overall strategic plan of the company should mandate the direction of the HR strategy. It should be fluid, based on the changing business needs of the company, but directed and always working towards the company’s goal.
Need an example?
- If the organization has social responsibility as one of its key goals, the HR strategy should promote that through the hiring process.
- If they are a tech startup who values social responsibility, their hiring process will be markedly different from the health food store’s process.
The tech company may desire programmers who personally embrace social responsibility, but may only need a few to meet their current programming need. The health food store may be gearing up for a busy season when people are more likely to turn to healthy living, such as at the beginning of a new year, and need a dozen temporary employees. Understanding not only the company’s products/services, but their overall vision will ensure that the HR strategy promotes the company’s vision.
ESTABLISH THE HUMAN RESOURCE DEPARTMENT’S ROLE
After the company’s vision has been clearly identified and communicated, the next step in developing an effective HR strategy is to establish the role of the human resources department. When designing a strategy for the HR department, understanding the specific tasks that HR will handle is essential.
- Will the HR department handle hiring/firing decisions?
- Will they develop a pool of potential candidates that will then be interviewed by company executives?
- Who will manage payroll and benefit concerns?
- Is this an area that will be outsourced to a payroll company or will it be handled in-house?
A concrete plan for handling these employee issues will eliminate confusion later.
HR Strategy – What is it? Why do we need it?
DEVELOP A COMPANY OVERVIEW
Once the role of the HR department is clearly outlined, a company evaluation must be completed. In effect, a total workplace plan will be established, giving a picture of where the company currently is and providing a means of reaching their business goals while maximizing human resources. Establishing a strategy that will work must include feedback from people at all levels of the organization. Discussions with the financial department and company executives can determine the staffing needs of the company and ensure that an adequate number of people are hired as needed. The HR manager should meet with key employees in all departments to compile the characteristics of the best employees in each position. Those qualities can then be used to guide recruitment to ensure that incoming employees have similar skills and attitudes.
Sometimes labeled ‘Workforce Planning’, the process of identifying the competencies needed to meet the company’s goals gives the HR strategy a framework for making decisions about the human capital needed.
It balances budgetary concerns with the number of skilled workers needed and should be an ongoing part of the strategy HR uses. In addition, the total workplace plan should include information about the compensation and reward strategy that the business will offer. Defining the structure of both compensation and reward allow for standardized employee treatment across the company and help eliminate inconsistency. It also allows the company to maximize their payroll budget.
INVESTIGATE COMPANY NEEDS
Subsequently, the next step in developing an effective HR strategy is to begin seeking out the required human resources. This portion of the strategy includes not only hiring a talented workforce, but determining the methods of attracting that workforce.
- Would attending a job fair be a useful means of attracting potential employees?
- Does placing a classified ad generate the type of skilled labor force you require?
This may require an evaluation of the demographics of the existing labor force. Aging workforces face employee retirements, typically higher wages and the need for retraining on new methods. Including a plan to bridge the gap between current skills and future needs will help the HR strategy succeed. As older employees reach retirement, companies are losing valued resources that have skills and knowledge. The HR strategy must include a process to allow for the transfer of knowledge between employees.
Further, the HR strategy needs to include the areas that provide the competitive advantage within the job market, and find ways to maximize that advantage. Identifying weaknesses among the company staff members as well as providing a framework and timeline for correcting that area is also an important feature of the HR strategy.
- Will your company offer retraining as needed or allow for department transfers to find a more suitable position if the employee is unable to perform their job adequately?
- What is the length of time that the employee will have to self-correct any concerns about job performance?
As the overall plan emerges, the HR strategy may encompass the use of new technologies and business practices such as work-from-home plans, remote access and virtual workspaces. The proper oversight and handling of these additions to the HR strategy do not change the overall goal and direction of the company; they simply add a new facet to the responsibilities of the HR plan.
EVALUATE HR PROCESSES
As the HR strategy is put into place, there needs to be an evaluation of the processes used. Consistent redesign and tweaking allows the company’s employees to adhere to the policies and procedures of the HR department, while still exercising creativity and innovation. Design of a training program to develop corporate culture will be beneficial to an effective HR strategy.
Implementing measurement tools to evaluate employee job performance is imperative to help shape the company’s human resource department. These evaluations may be done in the form of 360 evaluations, career development reviews, performance reviews or other formats. The results of employee evaluations can help the strategy realign with company goals, install new training mandates to communicate job responsibilities and goal, as well as give indication of the overall climate of the workplace.
IMPLEMENT THE PLAN
Once the HR strategy has been developed, the plan must be implemented. Oftentimes, companies spend time and money developing plans that are filed in a drawer and never utilized. By creating a viable HR strategy, businesses can avoid this pitfall and develop a plan that will help their business improve. The HR strategy, while a driving force of the company, needs to be flexible to meet the ever changing needs of the company. Implementing a new strategy can be confusing and tiring. Company executives may be reluctant to ‘rock the boat’ with new methods of human resource planning. It should be noted, however, that the leadership of the company sets the tone for how the employees react to new systems. If the company executives embrace the new plan and demonstrate a willingness to utilize the new HR strategy, it is more than likely that the rest of the company will follow suit.
A gradual implementation of the strategy may be utilized, focusing on adding one feature at a time to allow current employees to grow accustomed to the new ideals. This may be demonstrated in the evaluation and realignment of compensation packages. Instead of introducing a new pay scale, a new hiring process and new job responsibilities all in the same meeting, it may be more prudent to introduce the new pay scale one week, and the new hiring process a few weeks later.
For a HR strategy to be effective, it must be measurable. Determining specific and measurable objectives are necessary to ensure that the strategy is working, and that it is beneficial. These objectives must give clear indication of how the success of a strategy will be measured.
If your HR strategy included the objective of ‘Fulfill hiring needs of company’ it would be difficult to determine if that goal had been met. By changing the objective to read ‘Filling 5 vacancies with qualified individuals to meet the needs of the sales department’, you have established a base-line for success and it is easy to quantify the success or failure of the objective.
Generalized objectives aren’t useful because they are difficult to manage and evaluate. ‘Increase safety measures’ is a valid goal, but impossible to qualify. Do the new fire extinguishers that were installed count? If you replace the batteries in the smoke detector have you increased safety measures? ‘Develop safety awareness through staff training program that all employees will complete by their employment anniversary date’ is both specific and measurable.
Constant evaluation of success is imperative to a comprehensive HR strategy. With that regular need for evaluation, you must also consider the potential need for change. Suppose sales figures indicate a need for increased staff. The HR department puts considerable effort into hiring the extra dozen people needed, and begins their staff training. When the company begins to have trouble making the payroll and it is revealed that sales figures were overstated the HR strategy will need to make rapid changes. Monitoring legal requirements and regulations can also necessitate change through the implementation of new laws or mandates that affect business. An increase in minimum wage may affect the budget and staffing needs of a company, requiring the company to make changes accordingly.
Diligence is required
Designing and implementing a responsive HR strategy requires diligence and work. Establishing the vision of the company, developing the role of the HR department as well as creating a workforce plan for the company are all part of the ways the strategy is designed. Implementing the plan through seeking out needed employees, ensuring the qualifications of the job are being met and then evaluating the success of the strategy are all elements of developing the HR strategy.
An effective HR strategy can benefit a growing company. Used incorrectly, the HR strategy can be fatal to a company’s overall health. Human resource strategies can be useful in developing the goals and initiatives of a company. It’s vital to include the company’s mission in the development of the HR strategy. Trying to develop one without the other can lead to disgruntled and misguided employees. Establishing a workforce plan without the appropriate goals or objectives of the company renders the workforce plan meaningless and weakens the overall company.
Don’t shy away from developing an effective HR strategy due to fear. Study best practice methods used by other companies within your industry. Begin with one area of your HR strategy and then slowly add more as your company gets used to the idea. HR strategies are not just a good idea, they’re good business sense.
We recommend some books for those interested in HR and Culture, so dive into them to gain more in-depth knowledge on creating an HR strategy.
SHRM Foundation Effective Practice Guideline Series – Human Resource Strategy