How to Build a People Strategy

Most organizations have a human resources function. Very few people have a talent strategy. And of the companies that claim to have it, only a few are building it in a way that is relevant to what the business is actually trying to achieve.

The distinction is important. Human resources manages policies, processes, and transactions. HR strategy answers another question. So when you think about where you’re trying to take this organization, what do you need from your employees and how do you create an environment where they can achieve that?

Start with business strategy

Before you define anything about your HR strategy, you need a clear reading of your business strategy: where your organization is going, what needs to be true to get there, and what the material uncertainties are. Without this clarity, your HR strategy becomes a collection of inconsistent HR initiatives.

Questions to answer: Where is this organization going in the next 3-5 years? What two or three capabilities will determine whether it gets there? Where is it most dependent on having the right talent? And where is it most at risk?

Assess the current state

Once you know where you’re going, evaluate where you actually are. This is where many people get stuck in implementing strategies. Organizations ignore honest evaluation and go straight to future state design.

There are three tiers of current assessment:

Employee composition. Who is there today? Skill distribution, experience distribution, and tenure patterns. Where are the gaps between what you have and what your business strategy requires?

culture and environment. What is it actually like to work here? How are decisions made? How is performance managed? The gap between the culture leaders describe and the culture employees experience is usually larger than leaders expect. Measurement tools like the Culture Mosaic Survey give you a systematic way to assess not only emotions, but also behavioral patterns that can fuel or hinder your strategy.

Human resources process. How effective are your recruitment, development, performance management, and succession processes? Are they producing the results you need? Where are you losing talent you should be retaining?

Define talent priorities

A talent strategy is not a list of HR programs. It’s a series of choices about what matters most. Given your business strategy and current assessment, where will you focus your talent investments?

For companies entering the growth stage, building talent acquisition capabilities and a scalable development infrastructure can be a priority. For companies navigating the cost environment, it may be to identify critical roles where the quality of talent has a significant impact and protect those roles while streamlining others.

Design a human resources system

Once you decide on your priorities, build a human resource system to support them. For each priority, think about what needs to change in the way you recruit, develop, manage performance, and reward talent. What are the 3-5 specific changes that will most directly facilitate this priority?

This is where most HR strategy documents go wrong. They remain at the level of visions and principles rather than being translated into specific processes, policies, and structural changes that actually change the way things work.

built-in measurements

An HR strategy without measurement is just a statement of intent. Build a measurement framework from scratch. What do you track to know if your strategy is working?

If retention is a priority, don’t just track turnover rates. Track leading indicators such as manager effectiveness scores, internal mobility rates, and development plan completion. By the time people leave, you have already lost the opportunity to act.