TABLE OF CONTENTS
- Step 1 - Understand your business strategy.
- Step 2 - Define the HR mission.
- Step 3 - Do a SWOT analysis.
- Step 4 - Conduct a detailed HR analysis (COPS) that posed you to answer the following questions:
- Step 5 - Define the critical points in human capital management.
- Step 6 - Suggest solutions.
- Step 7 - Implement and evaluate action plans.
- Problems with developing an HR strategy
Determining the personnel strategy directions consists of analyzing and diagnosing the situation and determining the rules of action based on inference. The basis is understanding the interdependence of phenomena and modeling plans so that what is happening in the personnel area responds to business activities, supports, and strengthens them.
The modern economy requirements create a coherent and concentrated approach to human capital management, which is the HR strategy. Its development is not a simple task. Its practical implementation will undoubtedly increase the HR team’s authority as a strategic business partner and allow for effective budget management. So what should you remember when preparing such a strategy?
Step 1 - Understand your business strategy.
The starting point for developing an HR strategy is the analysis of the business strategy in the company's operational part. This will allow us to define the business's fundamental driving forces, i.e., technology, distribution, competition, and markets. It will also be the starting point for identifying what these drivers have implications for human capital management and what people contribute to delivering results.
Step 2 - Define the HR mission.
The HR mission is the company's mission that relates to the "human" part of business. The development of the HR mission is the answer to the question: what is employees' contribution to the company's success?
Step 3 - Do a SWOT analysis.
Please focus on the internal strengths and weaknesses of human capital in your business, taking into account the current level of skills and abilities of the people employed. Also, review external factors by defining opportunities and threats related to people management. In particular, consider this:
• How will these issues affect business?
• Are you in danger of a lack of skills that will guarantee the company's success?
• What impact will the development of new technologies have on the employment level?
It is also advisable to review the team responsible for HR policy, considering various areas of tasks, the level of services provided, or its members' competencies.
Step 4 - Conduct a detailed HR analysis (COPS) that posed you to answer the following questions:
• Where are you now and where do you want to be in the future?
• What are the gaps between where you are now and what you want to achieve?
Take a look at the four dimensions of the organization (the so-called COPS), i.e .:
• Organizational culture (C-culture): beliefs, values, norms, and management styles in an organization
• O-organization: structure, roles, and reporting lines
• People (P-people): skill level and potential and leadership abilities of employees
• HR systems (S-systems): mechanisms that enable strategy implementation - employee selection, communication, career development, training, rewarding
Step 5 - Define the critical points in human capital management.
Go back to the company's strategic analysis and combine it with the SWOT and COPS analysis to define the critical issues crucial to the implementation of the HR strategy. Then rank them according to your priorities. They allow you to determine what to counter efforts and resources on.
Step 6 - Suggest solutions.
For each key issue, suggest a solution to the problem. Try not to rely on the practices and assumptions on which certain company activities have been carried out so far. Think about the implications of the solutions you propose and consider the mix of HR activities (see COPS) needed to address the critical issue. Translate such prepared action plans into SMART goals, taking into account each of the HR functions: development and training of employees, managers, performance assessment, rewarding employees, recruitment and selection, implementation, employment planning, and communication. Create action plans for each critical issue: set goals and a deadline for their performance.
Step 7 - Implement and evaluate action plans.
When creating a strategy, it is important to remember that the goals set should support each other and are consistent with each other, e.g.; the remuneration system must be integrated with the employee development and career plans. Employee development is of little value, as it is not linked to career advancement and does not give people a chance to acquire skills.
The necessary condition for the effective implementation of the HR strategy is its close relationship with its design. Therefore its development should take into account the involvement of business managers. Without their support, it will only be an empty document and will not bring any value to the business.
Problems with developing an HR strategy
There are three types of situations when a sound HR strategy cannot be developed:
The first case is the lack of or vague definition of business directions - if the business itself does not know how to demand it, it is difficult to answer such an undefined route from the personnel side. In this case, the company’s first HR strategy should focus on management in the company - its only goal will be to educate the essential leadership in the direction of the planned activities and support them in developing a realistic business strategy.
The second case is ignorance of the personnel team’s business plans, either due to its limitations or being "cut off" from the mainstream by business. In this case, the first company’s HR strategy should strengthen the personnel team’s position both internally (new competencies) and in the business’s eyes. After establishing good relations and information flow between the company and the personnel area, it will be easier to develop the target HR strategy.
The third case is the deliberate omission of real personnel problems in developing a business strategy, which should treat personnel as one of the four primary resources to implement the plan. A particular example of this is recruiting staff problems that cannot be solved in some geographic regions, creating new business locations there, e.g., factories, shops, branches. In such a situation, business plans are known, and the need for staff is evident. Still, the personnel team cannot secure the staff or can do it with a tremendous amount of work and costs, which calls into question the entire investment’s profitability. In such a situation, it would be appropriate to return to discussions with businesses about their plans - if these plans are not realistic, they should be changed.