How involved is your HR team in your company’s long-term roadmap? By building a solid HR strategy you ensure that your workforce evolves in line with your business goals. The post Understanding HR strategy appeared first on Sage Advice UK.

People & Leadership

Understanding HR strategy

How involved is your HR team in your company’s long-term roadmap? By building a solid HR strategy you ensure that your workforce evolves in line with your business goals.

The famous “fail fast, fail often” mantra among tech startups implies that their staffing needs are in a constant state of flux.

But what about traditional companies embarking on standard business journeys?

They are also subject to change, generated both internally and externally, and have just as much need for regular workforce adjustments.

The way to plan for such change is to draft HR strategies attuned to evolving goals and market demands.

In this article, we offer practical guidance on building an HR strategy that supports sustainable growth and enthusiastic employees. 

Here’s what we’ll cover:

What is an HR strategy?

An HR strategy is a plan that covers everything from recruitment and training to performance management and employee retention.

Most businesses view their people as their most valuable asset—an HR strategy is therefore essential for making sure that asset is used to best advantage.

This plan is your roadmap for attracting, developing and retaining the right talent to achieve your company’s goals.

It forms the backbone of successful people management in any business.

Without a clear plan for managing your people, you risk losing talent, facing compliance issues, and missing growth opportunities.

The operational foundation of your HR strategy is Human Resource Management (HRM), which focuses on day-to-day people operations and forms the core of strategy implementation.

Secondary components are strategic planning, performance analytics, decision-making, and change management activities—these guide and direct the operational work.

The role of strategic HRM in HR strategy

While HR strategy refers to the overarching plan that aligns an organisation’s human resources with its business goals, strategic HRM is the practical application of that strategy.

It involves the implementation of HR policies and practices that ensure the workforce is effective, engaged, and contributing directly to the organisation’s needs.

Strategic HRM addresses immediate challenges such as recruitment, employee retention, performance management, and adapting to changes in business conditions.

It optimises HR practices to respond to these challenges and ensures the workforce remains aligned with both short-term objectives and long-term success.

Organisations sometimes refer to “the 5 Ps” of strategic HRM: Purpose, Principles, Processes, People and Performance.

If you take any element in the HR strategy and consider those five aspects, you immediately have a systematic way to cover all angles of execution.

They describe what you want to achieve, the theory behind the plan, which processes and people should be involved, and how to measure the outcome.

Key elements of a human resources strategy

The foundation of any HR strategy is alignment with business goals, directly supporting what your company wants to achieve.

If you’re planning rapid expansion, your approach to human resources should focus on recruitment and scalability.

If you’re improving customer service, employee training might be where you want to dedicate most resources.

This means you must carefully consider the components of your HR strategy—how many and how much emphasis you give to each one—depending on their importance to your plan.

Common elements to consider include:

• Talent acquisition: finding and hiring the right people through structured recruitment processes and employer branding initiatives.
• Performance management: ensuring employees meet expectations and grow professionally through regular feedback, goal-setting, and development planning.
• Learning and development: keeping skills current and employees engaged through training programmes, mentoring, and career advancement opportunities.
• Compensation and benefits: attracting and retaining talent whilst staying within budget through competitive pay structures and meaningful benefits packages.
• Employee relations: maintaining a positive workplace culture through effective communication, conflict resolution, and engagement initiatives.
• Succession planning: preparing for leadership transitions by identifying and developing future leaders within your organisation.

Popular HR strategy models and frameworks

Just as the components of your HR strategy may differ based on your business’s needs, so too will the model you choose to guide and implement the strategy.

Selecting the right framework will depend on your company size, industry, and specific challenges.

Small businesses might prefer simpler frameworks, whilst larger organisations may need more comprehensive models.

Consider your company culture, available resources, and long-term goals when selecting a framework.

Here are four proven HR strategy models that can help shape your approach.

The Harvard model

The Harvard model, developed at Harvard Business School, highlights the importance of balancing the needs of employees with the goals of the business.

It guides the decision-making process in considering the interests of all stakeholders, including shareholders, customers, and the community.

It also takes into account factors like market conditions, legal requirements, and the economic environment, all of which can greatly affect HR practices.

This mix of internal needs and external challenges makes the Harvard model ideal for sustainable, long-term results.

The Warwick model

Created at the University of Warwick, this model also looks at both internal and external factors, but it puts more focus on the connection between business strategy and company culture.

While the Harvard model looks at stakeholder interests and external influences, the Warwick model digs deeper into how a company’s culture shapes its strategic decisions and how external forces like industry trends affect HR choices.

This approach works well for businesses that need to ensure their HR practices reflect both changing market conditions and their organisational values.

The Guest model

Named after HR expert David Guest, this model connects HR practices directly to performance outcomes, focusing on how employee attitudes and behaviours impact overall success.

It’s especially useful for companies that want to see how specific HR actions—like recruitment, training, and employee engagement—affect both individual and business performance.

The Guest model helps businesses assess how well their HR strategies align with their performance goals, making it a great choice for companies looking to build a culture that directly drives measurable results. 

The Ulrich model

Developed by Dave Ulrich, a well-known HR expert, this model positions the HR team as a strategic business partner, with four key roles that collectively aim to enhance HR’s contribution to business success.

These roles are:

• Strategic partner: aligning HR strategies with business objectives, helping the organisation drive growth, improve performance, and achieve long-term goals.
• Administrative expert: focused on optimising HR processes, ensuring efficiency in day-to-day operations such as payroll, benefits, and compliance.
• Employee champion: advocating for employees, ensuring their needs are met, promoting engagement, and fostering a positive workplace culture.
• Change agent: guiding the organisation through change by suggesting measures that facilitate transformation; and adapting HR practices to support new business strategies or organisational shifts.

This approach works well for larger organisations seeking to integrate HR into every aspect of their strategic direction.

Illustrating the practical applications of strategic thinking are virtually infinite. HR strategy is about how businesses tailored their HR strategies.

As an example, SolarWinds, a global IT management company, foresaw the need to manage rapid growth and improve operational efficiency across its HR, payroll, and finance functions.

By implementing Sage People, it automated operational reporting, reducing administrative burdens on HR, payroll, and finance teams.

Over four years the company expanded from 500 to 1,900 employees, facilitated by efficient onboarding processes, reduced attrition and enhanced productivity.

The strategic decision to automate allowed HR to focus more on core processes, such as improving employee engagement and performance management.

How to create an effective HR strategy plan

Developing your HR strategy requires a systematic approach that considers your business needs, resources, and objectives. Following a structured process ensures comprehensive coverage of all essential elements.

Follow these steps to ensure comprehensive coverage and effective results:

1. Analyse your current situation: Conduct workforce audits and skills assessments to identify gaps between your current capabilities and future needs.
2. Define clear objectives: Align your objectives with your business goals. Ensure they are specific, measurable, and time-bound to track progress effectively.
3. Research industry benchmarks: Understand market standards and competitor practices to ensure your HR strategy is competitive and aligned with best practices.
4. Develop action plans: Outline clear strategies for each HR component, such as recruitment, training, performance management, and retention.
5. Customise templates: if you use templates to map out your plan, adapt them to match your specific business needs whilst maintaining the comprehensive structure they provide for strategic planning success.
6. Assign responsibilities: Delegate tasks to team members to ensure that everyone is accountable for specific actions within the HR strategy.

To get the most out of following these steps, and launch workforce management programmes that deliver results, it pays to apply them with these key principles in mind:

Align HR with business goals

Ensure that the strategy directly supports your overall business objectives.

Every initiative should contribute to business success—whether through improved productivity, better customer service, or enhanced innovation capabilities.

This alignment creates measurable value and secures ongoing support from senior management. 

Use models and templates

HR strategy models—see the Harvard, Warwick, Guest, and Ulrich models above—can guide your approach and provide a clear structure.

Templates offered in HR software can also be a great starting point, offering pre-structured frameworks to ensure you don’t miss critical elements.

These frameworks typically include sections for situation analysis, setting objectives, action plans, and measurement criteria.

By adapting these templates to your business’s unique needs, you maintain the comprehensive structure they provide while allowing for your specific goals and challenges.

Stay flexible and review regularly

An HR strategy must remain agile and adaptable to changes within your organisation and the external environment.

Conduct quarterly check-ins to assess progress against objectives and identify areas for adjustment.

Regularly review and refine your strategy to ensure it stays relevant to shifting market conditions, employee expectations, and business priorities.

Set realistic timelines and assign responsibilities

Timely execution is essential for a successful HR strategy.

Set clear, realistic timelines for each component of the plan to ensure efficient progress and stick to deadlines.

Assign responsibilities to specific team members to ensure accountability and focus on key tasks.

This delegation ensures that each element of the strategy is being dealt with and that everyone involved knows their roles.

Choose appropriate metrics

Measuring the success of your HR strategy not only keeps you on track, but also gives you pointers as to how to adjust future programmes.

Select metrics to track performance across various HR components, such as recruitment, training, and employee engagement.

Regular monitoring of these metrics allows you to adjust the strategy as needed, ensuring continuous improvement.

This approach can extend to key performance indicators (KPIs)—which are HR metrics that directly affect business results—and regular evaluations.

Common HR strategy challenges and how to overcome them

HR strategy implementation occurs within the context of your company’s day-to-day operations, which can sometimes introduce constraints that hinder progress.

Here are some common obstacles businesses face in trying to keep the HR strategy on track, and suggested solutions to help overcome them.

Budget constraints

Limited budgets can make it difficult to implement comprehensive HR strategies, particularly for smaller businesses.

The most cost-intensive processes in HR are recruitment, training programmes, technology investments, and compensation.

Solution

Prioritise high-impact activities and demonstrate clear return on investment for HR programmes.

Start with cost-effective solutions, like improving internal communication or implementing basic performance management systems.

Complexity

A comprehensive HR strategy encompasses many elements, making the plan highly complex for businesses with limited staff and fewer specialised HR resources.

Managing all aspects of HR—from recruitment to performance management—can feel overwhelming in these cases.

Solution

Focus on essential HR components first, and gradually build complexity as your HR strategy grows.

You can start with the most critical areas, such as talent acquisition and employee engagement, and later expand the strategy to meet evolving needs.

Resistance to change

Employees or management may resist new HR initiatives or changes to existing practices because they are often accustomed to current processes.

They may fear uncertainty or disruption.

Change can create anxiety, especially if the new approach is perceived as complex or potentially harmful to established workflows.

Solution

Overcome resistance by clearly communicating the benefits of the new strategy, involving stakeholders in planning, and providing adequate training and support.

Lack of senior management support

Senior management may not support HR initiatives if they perceive them as irrelevant to the company’s core business objectives or if they are concerned about the costs and time commitments involved.

Additionally, HR strategies that require significant change may be met with hesitation if leadership is unsure of their potential impact or long-term benefits.

Solution

Build support by presenting business cases that clearly link HR strategy to company performance and profitability.

Skills gaps within your HR team

Insufficient skills or expertise within your HR team can hinder effective strategy execution.

Solution

Invest in external training, professional development programmes, or outsource certain HR functions while building internal capabilities.

Best practices in strategic Human Resource Management (HRM)

While HR strategy focuses on aligning people practices with business goals, strategic Human Resource Management (HRM) involves the ongoing management of those practices to ensure they deliver measurable results.

HRM is a more hands-on, operational aspect of HR, concentrating on the execution, optimisation, and adjustment of your HR strategy.

It requires flexibility, continuous assessment, and an adaptive approach to meet evolving organisational needs.

Here are some ideas for conducting HRM so that your HR strategy remains effective:

Conduct quarterly check-ins

Schedule regular assessments to evaluate progress against objectives and make adjustments where necessary.

Maintain open communication

Create channels for feedback from employees and management to understand their needs and concerns.

These suggestions can guide improvements in your HR practices.

Leverage data analytics

Use HR analytics to track key metrics such as turnover rates, employee satisfaction, and performance.

This helps you identify trends early, informing your decision-making.

Invest in HR technology

Use modern HR software systems that streamline processes and provide valuable insights or reports.

Automation gives you more time to spend on strategic activities rather than administrative tasks.

Build strong relationships with department heads

Understanding the specific talent needs of different departments helps align HR practices with the broader business strategy and ensures your HR plan supports every team effectively.

Final thoughts

Access to quality tools and software significantly improves your ability to develop and implement a well-thought-out HR strategy.

Adequate resources provide structure, efficiency, and professional guidance for your initiatives.

Specialised HR software platforms streamline strategy execution through automated processes, data analytics, and performance tracking capabilities.

These systems typically include modules for recruitment, performance management, learning development, and employee engagement monitoring.

Cloud-based solutions offer particular advantages for small businesses, providing enterprise-level functionality without significant upfront investment.

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