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April 9, 2024

How to develop an effective HR strategy

Discover the benefits of an effective HR strategy and learn how to build one for your business.


  • What is an HR strategy, and why is it important?
  • What are the key components of an HR strategy?
  • How can you develop an HR strategy for your business?

It takes a village to ensure an organization meets the internal demands of stakeholders and C-suite executives. As a result, a strong HR strategy is necessary to ensure that a company runs smoothly.

Let's explore the specific parts that go into an effective HR strategy. From there, you can use these insights to determine your approach to your organization's HR strategies.

What is an HR strategy, and why is it important?

An HR strategy is a plan that lays out how a company hires and uses human capital to align with and meet business needs. It’s designed to solve an organization's challenges by strategically hiring people. A healthy HR strategy can help guide an HR team’s hiring decisions. It can also give HR management key goals to focus on.

Benefits of an HR strategy

Some of the advantages companies can enjoy with an established plan include:

Reduced turnover

Placing employees in roles that match their skills and experience helps them stay at their companies longer. Successful leaders use hiring as more than a tool to quickly fill gaps. They hire to achieve their company’s goals.

Improved employee engagement

A well-designed HR strategy includes measures to enhance employee engagement and satisfaction. Workers are more likely to feel motivated when they understand their role in helping achieve business objectives. Engaged employees can be more productive and contribute positively to the organization’s success.

Focused compliance efforts

Employers can enhance risk management and compliance with an HR strategy. This plan ensures business and hiring practices follow labor laws, regulations, and industry standards. By paying attention to legal issues, employers reduce the risk of receiving fines and penalties.

Talent attraction and employee retention

Effective HR processes focus on attracting top talent. Successful leaders use hiring as more than a tool to quickly fill gaps. They hire to achieve their company’s goals. By implementing a recruitment strategy, employers can pair the right people with the right skills. Placing employees in roles that match their skills and experience can help them stay at their companies longer.

Better policy management

Every business needs processes and policies to function. The same goes for HR departments. Companies can effectively track progress by aligning business goals with HR procedures. Sturdy policies can also make it easier to complete regular reviews and update recruitment efforts.

Minimized business disruptions

Creating business continuity through planning reduces the number of disruptions teams experience. Proactive preparation ensures businesses can keep moving forward even when obstacles appear. If a business does have to rebuild at any point, an effective HR plan can be a great foundation.

Increased diversity, equity, and inclusion

A strong HR strategy can also promote workplace diversity, equity, and inclusion (DEI). Incorporating DEI initiatives in this plan helps teams become more intentional about hiring. It also highlights how important diversity is for the entire organization.

What are the key components of an HR strategy?

Every organization is unique, meaning each HR plan they craft is different. Specific areas that every HR strategy should try to have include:

HR mission statement

An HR mission statement is a summary of an organization’s hiring intent. It's where employers define what they’re trying to achieve and the foundation that informs your HR practices.

Organizational culture

Syncing HR strategies with a company’s goals can make it easier for organizations to hire people who fit their ideal workplace culture. Organizational culture allows employers to determine the type of working environment they want. They base this information on the business and its values. Then, HR can use this culture to promote desired behaviors and skills.

Recruiting services and talent acquisition

An HR strategy can identify key tactics for reaching and hiring qualified workers. The goal here is to guide the company toward its ideal candidates. Whether it’s advertising and outreach, job description copy, or brand image, these HR strategies inform how the company markets to potential employees.

Talent management and development

It’s not enough to hire the right people. HR is also responsible for ensuring employees have the required skills for success. This preparation goes for onboarding new individuals and ongoing training for all team members. Human resource professionals can create development plans and educational opportunities to boost learning. This includes:

  • Annual in-person training with the whole team
  • Daily email tips
  • Monthly training sessions led by senior employees
  • Quarterly webinars around a particular topic
Compensation and benefits

A strong HR strategy should create competitive compensation and benefits plans. Senior executives can be part of the HR strategic building process to offer thoughts about wages. It’s also beneficial for employers to look at other companies to determine if their benefits are retaining talented employees.

How can you develop an HR strategy that fits your business?

Once employers have the components of their HR strategy figured out, they can develop their plan. HR professionals can use these steps and tips for strategy formulation:

Review an HR strategy framework

A human resource strategy framework provides a structure for HR management. This outlinehuman value, aligning HR products and services, and delivering value.

Grasp the value HR delivers to the organization

Before creating a strategy, employers must know what their organization offers. Companies should understand their business strategy and future goals. Then, teams can identify how these impact the HR strategy and human resource priorities.

Do a strengths, weaknesses, threats, and opportunities (SWOT) analysis

A SWOT analysis allows organizations to visualize their strengths, weaknesses, threats, and opportunities. Its purpose is to help employers learn how these elements impact HR processes. It’s also a beneficial tool for solving problems with recruitment and talent acquisition.

HR leaders can ask these questions to learn about their company’s needs:

  • How do target candidates view the organization?
  • In what areas does HR currently underperform?
  • How can the company use HR outside of what they’re doing?
  • What achievements has HR made?
  • What resources does the HR department lack?
Observe emerging HR trends

While teams shouldn’t base all their strategies on emerging trends, paying attention to them is helpful. New HR trends include new developments and technologies that could automate processes. Other HR advances involve popular work arrangements, employee benefits trends, and artificial intelligence usage. Being aware of common HR practices or innovations can aid teams in planning.

HR teams should know about internal and external factors that require implementation. Understanding how these adaptations impact HR saves companies time and energy.

Determine long-term goals

An HR strategy is inherently long-term. However, plans can fall flat without considering the company’s future goals. HR professionals must use this strategy to align with existing business objectives. That way, all departments move forward in the same direction.

Additionally, plans need to be adjustable. HR needs to remain aligned if results are unexpected or the company’s goals shift. Employers should encourage employees to always leave room for adjustments.

Get management buy-in

An HR strategy won’t work without the team’s approval. It requires resources, skilled talent, and internal support. This backing only comes from getting management buy-in. An HR team can show the importance of carrying out the strategy by demonstrating how it delivers value. Team members can discuss how the strategy boosts organizational goals, employee performance, and workforce planning.

These meetings also offer a chance for HR to answer questions, clarify points, and explain what they’ll do to make this successful. Fielding questions from C-suite executives can ease strategy concerns. It can also make them more passionate about the plan because it will help the business flourish.

Upskill your HR team

An HR strategy can’t accomplish its mission without a proper team. Companies must ensure the best HR professionals implement and execute the plan. These team members must understand the organizational goals and HR initiatives and how they work together. They must also know how to identify gaps and have ideas to fix them.

Monitor HR analytics

Companies should monitor every action to learn its impacts. To do this, employers can set quantitative key performance indicators to measure success. Observing HR initiatives is an ongoing process, requiring regular check-ins. Employers can make updates if the HR strategy isn’t delivering the desired results.

Key HR analytics include:

  • Absence rate
  • Employee engagement index
  • Employee satisfaction index
  • Internal promotion rate
  • Supervisor and employee feedback
  • Turnover and retention rates

HR consulting is your guide to improved HR processes.

Even the most informed and prepared HR teams may need a bit of assistance. Especially when it comes to staying competitive in a fast-paced hiring environment. Help your company align its HR strategy with existing business goals by partnering with the HR consulting specialists at Marsh McLennan Agency.

Our team offers several solutions, including:

  • Competitive compensation and employee retention programs
  • Compliance insights 
  • HR On Call: Quick HR answers, helpful samples, and resources
  • Recruiting services

Ready to create an effective HR strategy? Reach out to one of our HR consulting specialists today.