Developing an HR strategy: Who is responsible and what are the main steps?

It’s hard to imagine any modern business without human resource management. This department is literally the heart of the company. It is not just a service department but an important strategic arena. The HR department develops and implements solutions aimed at ensuring the highest efficiency and success of the company by improving the interaction between people.

In this context, the right HR strategy is a fundamental element in achieving a balance within the company that improves business success through the right recruitment, development, and other processes.

In this article, we will look at the key steps in developing an HR strategy that need to be taken for its successful implementation.

The key steps in developing an HR strategy

1. Understand the business and its goals:
   • talk to the management to understand the main business goals and the overall strategy of the organization;
   • find out what staffing requirements are needed to achieve these goals.
2. Assessment of employee qualifications:
   • assess the competencies and skills of the company’s employees;
   • determine how the current level of employee skills matches the level desired to achieve your business goals.
3. Talent development strategy:
   • identify the key talents in the organization and their role in executing the strategy;
   • develop a plan to retain and develop these talents.
4. Development of existing employees:
   • create individualized development plans for employees based on the needs of the company, as well as taking into account the aspirations and ambitions of employees;
   • provide access to learning resources and training.
5. Identify limitations:
   • determine the financial and time constraints for implementing the strategy;
   • plan resources and budgets, respectively.
6. Digital solutions and analytics:
   • implement a digital solution for easy collection and use of data for analysis;
   • use analytical tools to measure performance and improve the strategy based on this data.
7. Create a mission and vision statement:
   • define the goals of the HR strategy and define them in a mission and vision statement;
   • ensure internal communication and conflict resolution in a manner consistent with the mission and vision of the business.

Key aspects of HR strategy development

Business goals and direction of the organization’s development

The HR strategy should be closely linked to the business goals and overall direction of the company. These factors are crucial, as HR must clearly understand the needs and direction of the business for a specific period of time.

Once starting to develop an action plan, HR focuses on identifying and improving certain success indicators that will be crucial for the organization’s future development. A well-designed strategy helps to:

• improve corporate culture;
• reduce staff turnover;
• attract new and highly qualified employees;
• increase staff productivity
• develop an HR brand;
• minimize business expenses on employee retention, etc.

Assessment of the current state of the workforce

The next step in developing an HR strategy is a comprehensive assessment of the current state of the workforce. By analyzing employees’ performance, resumes, project history, and level of knowledge, HR determines which employees are working well enough and which need help to develop within the company.

Having a complete picture of the state of the workforce, HR explores the strengths and weaknesses of the organization’s current staff. Based on this analysis, it is already possible to identify needs, such as the required number of employees and their skill level.

Developing and setting goals

At this stage of the HR strategy development process, experts focus on setting specific goals.

First, they identify key needs related to the overall strategic objectives of the business, such as attracting and retaining staff or improving skills and productivity. HR determines which aspects of HR management are critical to success and formulates goals in a way that is specific, measurable, and realistic.

There are specific initiatives and programs associated with the development of an action plan to achieve the strategic needs of HR. This section defines the actions required to achieve the goals, such as developing programs to attract and retain staff or implementing training initiatives.

In order to determine the effectiveness of the planned actions, key performance indicators (KPIs) are defined. They allow you to measure progress towards achieving these goals and adjust the strategy as needed. These can be qualitative or quantitative indicators: employee satisfaction, staff turnover, employer rating, etc.

Cascading strategic goals

After analyzing human resources and setting goals, HR needs to know what assets the organization currently has and what actions need to be taken to achieve the goal. Further, strategic plans should be cascaded to different areas of the HR department, such as recruiting, learning and development, compensation and benefits, and interaction with employees as a People partner.

If the company has a small staff and a limited number of HR specialists, the division of responsibilities can be simplified. Such an HR department can combine recruiting, development, and retention functions, meaning that one or more employees provide the entire employee life cycle in the company.

Implementation of digital HCM solutions

Among the main areas of HR strategy development, the following tasks are most often identified:

• reducing staff turnover;
• increasing staff engagement;
• development of employees’ professional skills, etc.

Each of these tasks involves different processes, such as conducting internal trainings to improve staff skills or implementing a time tracking system and tasks to optimize work.

To improve and facilitate the performance of tasks, modern HR departments use digital HCM & LMS systems that allow automating most of the necessary processes, conducting employee data analytics, and even creating their own academy with interactive content.

One of these digital systems is SMART HCM & LMS.

Why is SMART HCM & LMS necessary for business?

SMART HCM & LMS is a human capital management (HCM) platform and learning management system (LMS) that eliminates the need for businesses to purchase many disparate tools to meet the needs of each area of the HR department.

Thanks to various system modules, this platform offers comprehensive tools for managing HR, recruiting, training, analytics, and other aspects of HR.

How does SMART HCM & LMS help in the implementation of HR strategy?

• Recruiting in SMART HCM & LMS provides tools for effective management of the hiring process. Thanks to integration with various job platforms, recruiters can quickly create and post job offers in a single click. An automated funnel makes it easier to track the progress of candidates through the recruitment process and speeds up decision-making.
• Onboarding facilitates the onboarding process for new employees, making it more efficient and less dependent on the HR department. The system automatically assigns an onboarding plan, and employees get access to information about responsibilities and corporate culture.
• Employee assessment and goal setting allows you to assess employees on a regular basis and will not let you forget about the need to highlight the team’s successes. The system records goals and then estimates their fulfillment and employee productivity.
• E-learning and gamification allow you to set up a systematic learning process and create a knowledge base necessary for professional development. Training includes game mechanics and a reward system to engage employees in learning and corporate life.
• Self-service portal is a space for employees to customize general information about themselves and manage their personal development. From managing their own profile to requesting sick/vacation and other days, this intuitive tool ensures efficiency and comfort in internal interactions with the system.
• The module with HR analytics is worth a separate mention. It enables data visualization and automated business intelligence based on Microsoft Power BI. By providing a single data warehouse, this solution helps to look at work processes from a different analytical angle and develop the highest-quality HR strategy.

The importance of developing modern HR strategies

The HR department is one of the key elements of a company’s success, no less important than sales or marketing. Developing an HR strategy is a priority for businesses, as it determines the future success of the organization as well as the level of productivity and employee satisfaction.

It is important to note that to effectively develop an HR strategy, HR professionals need to have a deep understanding of the company’s products and services, as well as its business processes. Interaction between HR and other departments contributes to the coherence of all aspects of the company’s activities.

The use of digital solutions such as SMART HCM & LMS makes it possible to optimize and automate HR processes, which increases the efficiency of the HR department.