Human resources (HR) strategies play a critical role in helping organizations achieve their goals. HR strategies provide a framework for managing people to get work done and achieve business objectives. There are four main types of HR strategies that are commonly used in organizations:
Human Capital Strategy
A human capital strategy focuses on managing the organization’s workforce as a strategic asset to drive business performance and growth. The goal is to have the right people with the right skills in the right roles at the right time to execute the organization’s strategy and achieve objectives. This involves aligning HR systems and processes with the organization’s strategic objectives in areas such as:
- Workforce planning – forecasting labor and skill requirements and developing talent acquisition strategies to meet needs
- Talent management – recruiting, developing, motivating and retaining top talent
- Performance management – setting goals and expectations and measuring employee performance
- Leadership development – developing capabilities of leaders to manage teams and drive growth
- Succession planning – identifying and developing pipeline of future leaders
- Compensation and rewards – compensating, rewarding and recognizing high performing employees
- Engagement – creating an engaging work culture and employee experience
Effective implementation of human capital strategies can give organizations a competitive advantage through having a skilled, engaged and productive workforce.
HR Analytics Strategy
A HR analytics strategy utilizes data and analytics to provide insights that can inform better HR decisions. HR analytics involves collecting and analyzing HR data in areas such as:
- Recruitment metrics – cost per hire, time to fill, source of hire, offer acceptance rate etc.
- Retention and turnover – retention rates, turnover rates, reasons for turnover
- Performance – productivity, absenteeism, quality, sales, customer satisfaction
- Compensation – pay equity, labor costs, benefits costs
- Learning – training costs, participation rates, training program ROI
- Engagement – satisfaction, commitment, motivation
Advanced analytics techniques can then generate insights from this data such as:
- Predicting future attrition
- Identifying characteristics of top performers
- Determining optimal compensation strategies
- Calculating ROI of training programs
- Forecasting future hiring needs
These insights enable HR to make more informed, data-driven decisions to help improve workforce performance, talent programs, employee engagement, retention and other HR priorities.
HR Automation Strategy
A HR automation strategy aims to streamline and automate routine, transactional HR tasks to free up HR staff to focus on more strategic priorities. This can include automating processes such as:
- Employee onboarding
- Benefits enrollment
- Time and attendance tracking
- Performance management administration
- Employee surveys
- Leave and absence management
- Compliance reporting
Automating manual, repetitive administrative tasks improves HR efficiency, reduces costs, minimizes errors and provides a better employee experience. It allows the HR team to focus their time on more high-value strategic initiatives.
HR Digital Strategy
A HR digital strategy aims to create digital, mobile and user-centric HR experiences for employees and managers. This can involve initiatives such as:
- Deploying self-service HR technology so employees can access information and perform tasks.
- Providing online and mobile access to HR services.
- Using digital channels such as apps, chatbots and social networks to engage and communicate with employees.
- Implementing a HR service delivery model with cloud platforms, automation and consumer-grade user experiences.
- Using digital analytics to gather employee feedback and understand engagement levels.
- Partnering with IT to provide digital collaboration tools and modernize the workplace.
The goal is to take advantage of digital, mobile and social technologies to better attract, engage and serve the modern workforce, while also making the HR team more efficient.
Implementing HR Strategies
There are some key steps involved in implementing HR strategies successfully:
- Strategic Planning – Develop overall business strategy and identify workforce implications and objectives.
- HR Strategizing – Formulate HR strategies aligned to business strategy.
- Execution Planning – Define specific actions, owners, budgets, milestones and timelines to execute the HR strategies.
- Communication – Communicate the HR strategy and execution plans to stakeholders across the organization.
- Execution – Implement the HR initiatives and activities outlined in the execution plan.
- Measurement – Establish metrics and collect data to measure outcomes and track progress against goals.
- Monitoring and Refinement – Monitor implementation, track progress, identify issues, and refine strategies as needed based on insights.
Some best practices that can help enable successful implementation include:
- Secure senior management endorsement and support
- Involve stakeholders through consultation and communication
- Ensure alignment between HR strategies and wider business strategy
- Establish clear ownership and accountability
- Allocate sufficient resources and budgets
- Develop integrated and detailed implementation plans
- Focus on change management and adoption
- Measure and track progress frequently
- Anticipate and manage resistance
Benefits of Strategic HR
Some of the benefits that organizations can gain from developing and implementing strategic HR include:
- Improved achievement of business goals through workforce optimization.
- Increased workforce productivity and performance.
- Enhanced talent recruitment, development and retention.
- More efficient and cost effective HR operations.
- Greater employee engagement and commitment.
- Data-based and metrics driven HR decision making.
- Clear accountability and governance over HR activities.
- Increased agility and responsiveness to changing business conditions.
Research has shown that organizations with mature, strategic HR functions tend to outperform competitors on measures such as revenue, profitability, productivity, and customer service.
Key Takeaways
- The four main types of HR strategies are human capital, HR analytics, HR automation and HR digital strategies.
- HR strategies provide a framework for managing people to achieve business objectives.
- Effective HR strategies align HR initiatives with wider business goals and strategy.
- HR strategies should be translated into detailed execution plans and implemented rigorously.
- Outcomes and progress should be continually measured and monitored.
- Strategic HR has been linked to improved business performance and competitiveness.