Tool 5 Steps To Building An HR Strategy

Tool: 5 Steps to
Building an HR What it does

This guide will help you develop a clear HR strategy
Strategy
that is aligned to your organization’s strategy.
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Instructions for Use and Table of Contents
Creating an HR strategy can be daunting. Following each of the steps in this guide will help you
develop a clear HR strategy that has measurable outcomes and is aligned to your organization’s
goals. Each of the steps in the HR Strategy Creation Map includes key questions to consider during
that step. Further guidance is included in the Notes section of the slides.
• Slide 3: Definition of Strategy

• Slide 4: Key Roles and Responsibilities in HR Strategy Creation
• Slides 5 to 12: HR Strategy Creation Map
• Slide 13: HR Strategy on a Page
• Slide 15: Tips for Effective HR Strategy Communication
• Slide 16: Next Steps: Cascade HR Goals to Strategic Plan
• Slide 18: Triggers to Revisit Your HR Strategy
• Slides 19 to 23: Blank Templates
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What Is a Strategy?
Organizational Mission Organizational Strategy People/Talent Strategy HR Strategy HR Practices
Focus North Star of the Compass/map for the Employees across the System of HR activities and Individual HR practice or
organization organization organization core processes subfunction area (e.g.,
recruiting, total rewards)
Level Organization level Organization level Organization level Functional unit (HR) Subfunction and job level
Who Founders, board, C-suite C-suite, board C-suite, head of HR, business Head of HR, HR leadership HR leadership, functional
unit leaders outside HR leaders
Frequency/ Does not change Reviewed annually Reviewed annually and when Reviewed annually and when Reviewed more
Cadence there is a significant change to there is a significant change frequently than annually
organizational strategy or trigger to organizational or people and adjusted based on
strategy or trigger progress toward
performance metrics
Question What is the purpose of How will we achieve our How do our employees need to How will our practices and What are we going to do
to Answer our organization? mission? support the organizational processes support our within HR to achieve our
strategy? organization’s employees in strategic objectives?
achieving the organization’s
strategy?
Objective Provide the organization Provide the organization Provide organization with general Provide a plan to achieve Designed and executed
with a North Star. with an overall direction directive for all employees to goals. Ensure that all by HR.
and sustainable support organizational strategy. employees have the skills,
competitive advantage. attitudes and behaviors Enable and support
Aligned with organizational necessary to successfully employees to meet
Aligned to organizational strategy. meet the demands of their strategic goals. Provide
mission. jobs. infrastructure for this.
Aligned with organizational Aligned with HR

and people strategy. strategy.
Key Roles and Responsibilities in HR Strategy Creation
Establish the roles and responsibilities of different functional stakeholders from the start. Make sure to identify
stakeholders who reflect the dependencies within your organization. Specify the responsibilities for each role.
Role Responsibility
Head of HR Define and finalize the function’s objectives and action plan.
CEO/Executive Committee Approve the function’s strategy and key investments.
Business Unit Leaders Provide input on business strategy and the function’s performance
Direct Reports to Head of HR Build project proposals and estimate resource requirements.
Oversee implementation of HR initiatives and monitor progress
toward strategic goals.
HR Managers Conduct planning analyses and provide process- and activity-level
input for relevant subfunctions.
HR Employees Provide input on relevant process- and activity-level tasks.
Execute tasks to support HR initiatives and progress toward
strategic goals.
HR Strategy Creation Map
Organizational Strategy
Organizational Organizational Organizational

Goal #1 Goal #2 Goal #3
Future HR Function Future HR Function Future HR Function

and Future Talent and Future Talent and Future Talent
Needs Needs Needs
Current Capabilities of HR Function and Talent
Gap Assessment Gap Assessment Gap Assessment
HR Goal and Criteria HR Goal and Criteria HR Goal and Criteria

for Success for Success for Success
HR Strategy
Source: Gartner
Step 1: Understand Organization’s Strategy and Goals
Organizational Strategy
Organizational Organizational Organizational

Goal #1 Goal #2 Goal #3
• Key Questions
– What are the key business objectives for the next one, two and five years?
– What are the organization’s core strategies to achieve these goals?
– How does the organization plan to execute these strategies?
– What are current challenges facing the organization?
Step 2: Identify Capabilities and Skills for Future
Future HR Function Future HR Function Future HR Function

and Future Talent and Future Talent and Future Talent
Needs Needs Needs
• Key Questions
– How will business processes and locations change talent needs in the future?
– What are the specific skills, competencies and abilities that employees will
need to have in the future to successfully support the business?
– What will HR need to do in the future to support the organization’s goals?
– Who needs to be included in discussions of future skills?
– How are competitors or organizations in similar industries changing the skills
they look for?
Step 3a: Evaluate Current Capabilities and Skills
Current Capabilities of HR Function and Talent
• Key Questions
– How do HR’s line partners assess the HR function’s current performance?
– If HR’s line partners are not satisfied with current performance, what changes
need to be made for better future performance?
– Currently, are the right people in the roles most critical to success?
Step 3b: Identify Gaps
Gap Assessment Gap Assessment Gap Assessment
• Key Questions
– What are the gaps between the current capabilities of the HR function and what
is necessary to help the organization successfully achieve each business goal
in the future?
– Will the current capabilities and skills of the workforce be able to meet the
organization’s future talent needs? What are the gaps in employee skills?
– What information, tools and support will help employees going forward?
– What are potential internal barriers to success (e.g., lack of internal mobility)
and what are the potential external barriers to success (e.g., tight labor market
or other macroeconomic conditions)?
Step 3b: Tool for Identifying Skills/Resource Gaps
Do We Have the
Do We Have the Business
Resource
Skills Needed to If No, What Skills and/or Case
Organizational Goal Capacity Needed Budget Implications
Accomplish? Resources Are Needed? Required?
to Accomplish?
(Y/N) (Y/N)
(Y/N)
1. Expand market into Asia No No • Hiring and/or relocation • Compensation and benefits No
of 200 FTE to staff for new hires
offices in Asia • Relocation packages and
• Multilingual employees incentives for expats
2.
3.
4.
Step 4: Develop HR Goals and Criteria for Success
HR Goal and Criteria HR Goal and Criteria HR Goal and Criteria
for Success for Success for Success
• Key Questions
– What are our top priorities in HR (based on organization-level priorities)?
– What do we want to accomplish in the next one, two and five years?
– How will we define success?
– Is the outcome measure specific?
– Can the metric be measured with a reasonable level of accuracy?
– Does the change in the metric reflect progress toward the desired outcome?
Step 5: Communicate Your HR Strategy
HR Strategy
• Key Questions
– Is the strategy communicated in a simple and straightforward manner? Is there
any way to communicate this more clearly and simply without sacrificing critical
details?
– Has communication been tailored to different stakeholder groups?
– Do stakeholders understand what the HR strategy means for their own work?
HR Strategy on a Page — Example
STATEMENT OF HUMAN RESOURCES STRATEGY
Deliver solutions that enable the organization’s talent to actively contribute to the overall business and support its growth into new markets.
State of Talent Health in 20XX Top HR Strategic Goals State of Talent Health in 20XX
Top Five to Seven Metrics Top Five to Seven Metrics
Describing the Initial State 1. Support market expansion into Asia. Describing the Desired State
• Revenue per employee: • Revenue per employee:
$147,000 2. Create an HR project pool team to provide more $242,000
• Projects completed by HR concentrated and timely support for line leaders and • Projects completed by HR
project pool team: 0 managers to execute our corporate transformation. project pool team: 5
• Percentage of diverse • Percentage of diverse
leaders:15% 3. Increase organizational visibility and transparency into talent leaders:25%
• Successor coverage for through redesigned calibration and succession processes, • Successor coverage for
critical positions: 60% supported by HRIS upgrades. critical positions: 75%
• Ratio of external to internal • Ratio of external to internal
hires into management 4. Create diversity programs and employee resource groups to hires into management
levels: 7:10 foster a respectful, inclusive and diverse workforce and levels: 5:10
• Headcount in Asia: 0 FTE increase diversity in leadership. • Headcount in Asia: 200 FTE
Underlying Beliefs and Assumptions

1. The organization will continue to go through an increasing number of major, enterprisewide changes that require more collaboration.
2. The number of leaders eligible to retire in the next three years will double.
3. The organization will remain flat, making it more difficult to for employees to get experiences through vertical career movement.
4. Our corporate financial targets will grow faster than the rate with which we add staff to the business .
HR Strategy on a Page — Example
Deliver solutions that enable the organization’s talent to actively contribute to, and have a positive impact on, the overall business.
State of Talent Health in 20XX Top HR Strategic Goals State of Talent Health in 20XX
Top Five to Seven Metrics Top Five to Seven Metrics
Describing the Initial State 1. Create an HR project pool team to provide more Describing the Desired State
• Percentage of diverse concentrated and timely support for line leaders and • Percentage of diverse
leaders:15% managers to execute our corporate transformation. leaders:25%
• Successor coverage for 2. Increase organizational visibility and transparency into talent • Successor coverage for
critical positions: 60% through redesigned calibration and succession processes, critical positions: 75%
• Ratio of external to internal supported by HRIS upgrades. • Ratio of external to internal
hires into management 3. Create a culture of career partnerships to better design, hires into management
levels: 7:10 motivate, market and manage employees across their career levels: 5:10
• Retention rate for critical and reduce skills shortages. • Retention rate for critical
talent: 60% 4. Create a corporate diversity function, programs and talent: 75%
• Employee engagement employee resource groups to foster a respectful, inclusive • Employee engagement
level: 76 and diverse workforce. level: 83
5. Redesign the performance management system to create a
workforce of enterprise contributors by reducing paperwork
and increasing the quality of performance conversations.

1. The organization will continue to go through an increasing number of major, enterprisewide changes that require more collaboration.
2. The number of leaders eligible to retire in the next three years will double.
3. The organization will remain flat, making it more difficult to for employees to get experiences through vertical career movement.
4. Increasing employee retention in high-growth business will remain a critical objective for the business.
5. Our corporate financial targets will grow faster than the rate with which we add staff to the business.
Tips for Effective HR Strategy Communication
Stakeholders/Audience Communication Tips
• Provide high-level overview of the HR strategy and its alignment to the corporate strategy.
C-Suite and Executive
Committee • Identify any major changes that may result from strategy (such as restructuring or technology
implementation requiring capital expenditure).
• Conduct one-on-one discussion with each business unit head.

Business Unit Leaders
• Customize the presentation to indicate benefits of the strategy for the relevant business unit.
• Find high-impact regional or global leaders who can be champions to help build support for the local HR
strategic plan.
• Identify people likely to resist change and target them proactively.
Direct Reports to Head of HR
• Segregate the team into smaller groups for communicating strategy plans.
• Personalize presentations for each group to tell them exactly what they must do to support the
implementation of objectives.
• Describe how the strategy relates to the business plan and organizational direction.
HR Managers and Staff • Explain how the strategy will affect the day-to-day work of employees to minimize uncertainty.
• Assess employee-related factors that may impact strategy execution.
Next Steps: Cascade Goals to Strategic Plan
Organizational Goals HR Strategic Goals Talent Objectives HR Activities Subfunctions
Org Goal #1: Talent Acquisition

HR Strategic Goal #1: Acquire Recruit locally
Increase market
Support market new staff
share through
expansion into Asia Absorb talent from Compensation and
expansion into Asia
acquired companies Benefits
Relocate
current staff Recruit, select and
Org Goal #2: HR Strategic Goal #2:
prepare employees Talent Acquisition
for relocation
Learning and
Develop relocation Development
packages
Org Goal #3: Compensation and
HR Strategic Goal #3:
Benefits
Next Steps: Cascade HR Goals to Strategic Plan
HR Strategic Goal # 1: HR Strategic Goal # 2: HR Strategic Goal # 3:
Support Market Expansion Into Asia
• Establish a 360-degree review process for local
Performance employees and expatriates.
Management
• Understand cultural expectations of the local

Diversity workforce.
• Develop cultural training and internal

Learning and mobility/rotation programs to Asia for HIPOs.
Development
HR Employee • Conduct expatriate-specific employee

subfunction Retention and satisfaction surveys.
Engagement
• Develop customized cross-cultural training for
Change individual expatriates and their family.
Management
• Create custom LTI/STI packages for local

Compensation and executives.
Benefits • Develop relocation packages for expatriates.
• Understand local labor issues and labor pool.
Talent Acquisition • Determine the need/ability to conduct internal
sourcing.
• Understand cultural background of the local
Organizational workforce.
Culture
Triggers to Revisit Your Strategy
Type Description
Strategy Redirection Proposed strategy change by head of business unit
Management Change Leadership change in head of business unit
Merger, Acquisition, Divestiture Decision impacting organizational function, EBIT, profit or assets
Technological Change Change in technological landscape Internal
Triggers
Missed Milestone Failure to hit agreed-upon milestones
Financial Underperformance Consecutive periods of missed financial targets
Employee Experience Change Shifts in employee engagement, performance or expectations
Industry Trends Innovations or development in the industry or related industry
Economic Changes Changes in economic environment
External
Talent Competitor Moves Change in who or where competitors are hiring Triggers
Competitive Position Change in sales, market share or category growth relative to
investors
Blank Templates
HR Strategy
Write your statement here.
State of Talent Health in 20XX Top HR Goals State of Talent Health in 20XX
Top Five to Seven Metrics 1. List your top goals for the HR function here. Top Five to Seven Metrics
Describing the Initial State Describing the Desired State
• Metric 1 2. • Metric 1
• Metric 2 • Metric 2

1. List any core beliefs or assumptions here.
2.
3.
4.
From Goals to Strategic Plan
Organizational Goals HR Strategic Goals Talent Objectives HR Activities Subfunctions
Org Goal #1:

HR Strategic Goal #1:
From HR Goals to Strategic Plan
HR Strategic Goal # 1: HR Strategic Goal # 2: HR Strategic Goal # 3:
Performance
Management
Diversity
Learning and
Development
HR
subfunction Talent Acquisition
Change
Management
Compensation and
Benefits
Organizational
Culture
HRIS
Skills and Resource Gap Identification
Do We Have the
Do We Have the Business
Resource
Skills Needed to If No, What Skills and/or Case
Organizational Goal Capacity Needed Budget Implications
Accomplish? Resources Are Needed? Required?
to Accomplish?
(Y/N) (Y/N)
(Y/N)
1.
2.
3.
4.

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Tool: 5 Steps to

Building an HR What it does

• Slide 3: Definition of Strategy

Aligned with organizational Aligned with HR

Organizational Organizational Organizational

Future HR Function Future HR Function Future HR Function

Current Capabilities of HR Function and Talent

Gap Assessment Gap Assessment Gap Assessment

HR Goal and Criteria HR Goal and Criteria HR Goal and Criteria

Organizational Organizational Organizational

Future HR Function Future HR Function Future HR Function

Current Capabilities of HR Function and Talent

Underlying Beliefs and Assumptions

Underlying Beliefs and Assumptions

• Conduct one-on-one discussion with each business unit head.

Org Goal #1: Talent Acquisition

• Understand cultural expectations of the local

• Develop cultural training and internal

HR Employee • Conduct expatriate-specific employee

• Create custom LTI/STI packages for local

Write your statement here.

Underlying Beliefs and Assumptions

Org Goal #1:

Org Goal #2: HR Strategic Goal #2:

Org Goal #3: HR Strategic Goal #3:

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