People & Leadership

How to build a HR or People strategy that’s aligned to your business strategy

Not sure how to create an HR or People strategy that fits with the business strategy? Here's what you need to do.

How do you develop a recruitment and retention strategy that meets both the short and long-term needs of the business?

How do you set budgets when it comes to things like learning and personal development? How do you make your company attractive to the best talent?

The simple way to answer these, and the many other questions that will inevitably arise, is to use the overall business strategy as the basis for your People strategy.

Here’s how to approach it.

1. Understand the goals of your business

Before integrating your People strategy it’s crucial you know your business strategy inside out. Knowing the short, medium, and long-term goals of your organisation will help you decipher your People priorities.

Is your company looking to sell or merge? If so, how will your staffing requirements change?

Do you deal in emerging technology? If so, do you need a contingency plan for unexpected shifts in this technology?

Are you looking to expand into other countries? If so, have you considered the implication of rolling out your strategy in different territories?

Make sure you understand what the company is trying to achieve, the industry it operates in, and what it will take to be prepared for any eventuality.

2. Focus on the financials

Obviously, the first priority for any business will be to generate at least enough revenue to cover operating costs.

Therefore, decisions you make should be compatible with organisational budgets.

To do this, ask a few financial questions about your People strategy. The way you answer will determine how People helps to answer the profitability question:

  • How are you investing in learning and development for existing employees?
  • Are you investing enough to keep top talent? (And have you made development plans for them?)
  • Are staffing requirements expected to change in the coming years, and how can you meet these
    expectations in a cost-effective way?

3. Draft a strategy from the business strategy

Once you’re familiar with the business strategy, it’s time to make a draft of your People strategy.

This should include short, medium and long-term projections for staffing. It should take account of trends in the industry, include an analysis of what your competitors are doing, and the kind of talent you’re looking to attract and retain.

Digital HR Tech recommends using a SWOT system – identifying the company’s strengths, weaknesses, opportunities and threats – and using it as the basis for consolidating the company’s present state while improving in the future.

Consider also your engagement strategies. Can you integrate new processes such as flexible working and, if so, how will you manage implementation?

Building a reputation, internally and externally, as an employer of choice is also vital. How will you invest in the employee experience?

Technology is a vital part of this.

Ensure you have the People systems and technology needed not just for today, but for your company’s future plans.

It should also include a plan for the coming year and projected timeframe after – what will you achieve? How does this fit within the overall business strategy?

Make sure you clearly set out how what you will achieve will contribute to organizational growth.

4. Use insights and data to influence decision-making

It’s important your People strategy isn’t dreamt up in a meeting room with just your team. Ensure stakeholders across the organisation can contribute – including, most importantly, employees.

What have employees fed back previously, and how can you act on this? Are there certain trends? Use data to understand patterns and behaviours. For example, is your churn rate higher at certain times of the year?

Bring important stakeholders with you on a journey: ask them, before you create your strategy, what’s important to them, and be sure to include teams such as IT and Finance.

That way, when you present your strategy back to senior stakeholders, their teams have played a part in creating it, and it helps them meet their business objectives too.

5. Allocate your budget

Once a figure is decided, and you’ve got sign off from the board, there’s no going back. You’ll be expected to use that budget and demonstrate a return on investment over the year.

To help you stick to your strategy as closely as possible, use this opportunity to devise a roadmap.

Work out when key business events will take place over the next year, from product launches to events, busy periods and quiet periods, then work out when and where to allocate your budget.

Also remember that things might change throughout the year – and it will be up to you to respond to those changes. It’s always worth planning what could go wrong at each stage, so you’re prepared if the worst should happen.

Most importantly, with every penny you spend, make sure you…

6. Measure your success

Keep records of money spent against results achieved. Your ultimate aim is to show how People fits into the overall business strategy by helping to generate revenue and ROI.

For instance, if a recruitment campaign is successful and you manage to acquire a pool of highly skilled new employees, you can measure output against the cost of recruiting them.

If they generate five times as much revenue as it cost to hire them in the first place, you can demonstrate this result to the board as evidence of the effectiveness of your campaigns. This will help you to secure budget next year.

Your People strategy is your business strategy

Ultimately, companies are made up of people – therefore, shouldn’t your business strategy start with your People strategy?

Whatever your business strategy calls for – be it growth, acquisition or even downscaling – it requires  the right people to make happen.

Your business can invest all it wants in tools or hardware – however the right tools in the wrong hands won’t make a bit of difference.

Therefore, every business strategy should begin and end with finding the right people; retaining them; and giving them the kind of incentives that encourage them to do their best work.

In short, your business strategy must always begin with your People strategy.