Strategic HR management: 5 critical steps for HR leaders

If you think it’s important to have a business plan and strategic vision, you need a human resources (HR) plan, too. It’s just as critical – and especially so in a post-pandemic workplace where having a people strategy can make all the difference in building an engaged, successful workforce.

A solid HR strategy:

• Gets your employees ready to execute on your business strategy and goals
• Helps prepare your current staff and anticipates your future HR needs
• Prevents employee turnover and prepares your business leaders to make strategic hiring decisions in the future
• Includes a succession plan to limit disruptions to your business should there be a change in management or structure

So what’s your company’s HR strategy?

If your HR department works only on tactical processes like payroll and time and attendance, you’re missing out on strategic HR benefits.

Business goals achieved with an HR strategy include:

• More productivity
• Higher employee satisfaction
• Better bottom-line results

Transform your HR department from a service group to a team that creates value across the company.

The complete HR strategy: Tactical HR and strategic HR

Tactical HR and strategic HR are both necessary for a company to reach its full potential. However, tactical HR must come first, because it includes things that make it possible to hire, train, pay and manage employees.

Tactical HR also addresses compliance with employment and benefit rules. Examples include, but certainly aren’t limited to:

• Processing forms for new hires
• Handling payroll
• Posting compliance notices
• Recruiting and hiring
• Writing job descriptions

Strategic HR examples include tasks that are future- and value-focused, such as:

• Building a pipeline of high quality job candidates
• Managing training and certification pathways for employees
• Improving employee engagement and productivity
• Developing employee retention programs
• Planning strategically for employee and leadership succession

5 HR strategy examples

Interviews, onboarding, performance reviews and other HR services can benefit from strategic input to create better experiences for candidates and employees. A strategic approach to HR can also help your company avoid common HR mistakes that involve tactical HR processes.

Remember: To effectively execute larger business goals, the whole culture must be aligned with them. And that requires HR insights and support.

In other words, having the HR department at the planning table – with a clear strategy in hand – is mission critical.

Here are five steps to creating an effective strategic HR plan and gaining a competitive advantage for your company.

1. Assess your current workforce

Your first step in strategic HR planning is identifying your current employees’ knowledge, skills and abilities. This includes evaluating your employees’ competencies, education levels training and certifications.

But you shouldn’t stop there. Consider what talents they have beyond their current job descriptions. For example, your data entry employee may also have a knack for building customer relationships. You can pick up on these less obvious talents by getting to know your employees through regular conversations – both formal and informal.

And chances are your personnel files already contain a wealth of information to help you monitor your employees’ talents and skills, such as:

• Resume
• Continuing education history
• Performance appraisals
• Projects completed

Having a system (e.g., an interactive organizational chart) to capture and archive your employees’ information can make keeping track of your employees’ talents easier. At the same time, your employees will feel more valued if it’s clear that you’re making note of their strengths.

In addition, performance reviews can help you determine when employees are willing and able to assume additional responsibilities. When employees consistently rank high in all categories, it is a good predictive indicator they may be ready to take on some more challenging work. Not all employees want to move to other positions, though. If this is the case, look for ways to challenge them in their current roles.

2. Create employee development plans

Having qualified employees is only one step when building a long-term HR program with a winning workforce. To make a real impact, your employees’ work needs to support the company’s growth goals.

You can do this by making an employee development plan . This will help you create clear direction on how to increase their skills and advance their careers so that your business can forge ahead. Follow these steps to help make sure your employees’ development plans are on point.

• Consider your business goals – Before you set objectives and track metrics for employees, you should try to align their development plan with your company’s needs.
• Talk to your employees – Don’t just assume you know your employees’ skill levels and career aspirations.
• Decide what skills your employees need – Once you’ve looked at each of your employees’ abilities and experience, as well as your company’s needs, decide exactly what skills each person needs to acquire.
• Create an action plan – Once you know what the objectives are, you can figure out how your employee will go about achieving them.
• Apply the new skills in the workplace – Set up some opportunities where your employees can quickly apply their new skills to the job and get feedback.

It’s important that your company doesn’t neglect the employees you already have – especially top performers. Even for your high achievers, there’s always room for improvement , and they still need development-focused attention from you.

Present employee development plans positively (and not solely as a form of corrective action) by positioning them as an opportunity to maximize potential and improve the employee experience. Retention is critical to maintaining a winning workforce.

3. Create a succession plan

With business growth comes change. Whether it’s a shift in the executive team or a reorganization of departments, you need to be prepared. A succession plan can help you minimize disruption by identifying critical roles in your business and employees who have the skills to immediately assume these positions, should someone leave.

You may choose to involve employees directly in creating your succession plan . This would mean having conversations with all of your employee stakeholders to find out what their career goals are, where they see themselves in the future, and what development they may need in order to get there.

Another option is to create a succession plan behind the scenes. The choice really depends on your organization’s culture.

Keep in mind that transparency eases anxiety and keeps your employees from imagining negative reasons for the changes. It also gives you the opportunity to explain the “why” behind the change and how it may affect them exactly.

4. Perform a gap analysis

A gap analysis helps you identify what resources your company has and what you’ll need in the future. When performing a gap analysis, you’ll assess your HR practices and infrastructure to determine where your company is falling short.

For example, some of your HR practices may be designed to fit where your company was five years ago, but don’t meet your needs today or where you plan to be soon. After a gap analysis, you can improve your current procedures and implement new practices that will better support your business’s growth.

When conducting a gap analysis, take a look at your:

• Job descriptions – Do they match the expectations you currently have for your employees and outline all the necessary skills and requirements?
• Employee handbook – Have you reviewed or refreshed it in the last two years? Check to see if your policies are still aligned with employment laws. This is especially important if you’ve expanded into new cities or states where you may be subject to different regulations. When was the last time your employees read the handbook? Consider asking them to re-read it once you make updates.
• Training programs – Are your employees being prepared for their roles in an organized way that still makes sense according to business needs?
• Health benefits – Are you providing what is required by the Affordable Care Act (ACA) while also meeting the needs of your employees?
• Sick days – New paid sick day standards are emerging across the country in a few states and a growing number of cities. Check the current sick days laws to be sure you’re in compliance.
• Business performance – If revenue is climbing, it may make sense to up your contributions to your employees’ retirement accounts or award more days of PTO, which will add value to your total rewards package. If revenue is down, consider scaling back on some of those benefits to help stabilize your business.

5. Decide how to increase resources for the future

As your business grows, so will your staffing needs. To find the best talent for your business, you must know whom you’re seeking ideally.

Review the information you have gathered about your current workforce. Do you have enough people? Do they have the right skills and know-how to help you achieve your business goals? This information can help you decide what jobs need to be filled and who would be the best fit. From there, you can better determine if you can promote from within or if you’ll need to recruit new talent as your business grows.

This is where your skills inventory is especially helpful. Do you already have a potential fit within? Do you need the skills to be mastered already, or could they be attained through training? Many times a current employee who is a known culture fit is worth investing in additional training.

As you think through potential staffing changes to come, also consider common struggles that could make it difficult for businesses to recruit new employees :

• Your current total rewards package doesn’t meet the expectations of your ideal candidates.
• Upcoming technology changes or shifts within the economy make it difficult to recruit quality talent. For example, say your business needs to adopt a new technology and there’s a shortage of experienced candidates who are qualified to fill the relevant positions.
• Your company culture is poor, which is a major turnoff for highly qualified candidates who can be choosy about where they work.

Knowing these things can help you avoid recruiting roadblocks before they become a problem. Resolving these issues are key to attracting great talent and improving employee retention. Otherwise, you may find yourself constantly replacing employees from an increasingly narrow, poor pool of prospects.

Time to develop an HR strategy

Remember: HR planning is an ongoing process. Your HR strategy should be reviewed regularly and updated as your organization changes. The key is to choose strategic initiatives that align with your company’s goals.

The role of HR is to be a business partner to a growing organization. So, strategic HR management can benefit smaller companies as well as larger ones. In fact, a smart HR strategy can help small organizations reach the 50-employee mark quickly and with stronger talent.

Not sure how to get started? Learn how to?create an air-tight HR strategy that puts you on the path to success by downloading our free e-book,?7 Most Frequent HR Mistakes and How to Avoid Them .