Roadmap to a successful HR strategy

By Mashooque Ali Bhatti

One of the key success factors of a high-performance organization is putting their people first. Today Human Resources (HR) executives are challenged to develop efficient, effective, and simple, yet powerful solutions to the people side of business. However, it remains difficult to determine the exact contribution of the HR function to achieve these objectives.

Here is a 10-step approach to help organizations define and execute an effective HR strategy, as well as develop and deliver services and capabilities that they need to survive and grow.

The power of Human Capital Value

The first step towards an effective HR strategy is to define value, and understand how business value is created. This requires a deep insight into the overall business environment, as well as a clear understanding of the organization's overall business strategy.

Step 1: Understand the business strategy

Understand market forces, trends and the business strategy, and identify their impact on the HR strategy and priorities required to execute the proposed action.

Step 2: Define HR strategy

Provide a roadmap for creating a unique competitive advantage by outlining how the organization will leverage its human capital to address business challenges and achieve its objectives.

  • Translate the organization's plan of action into an effective and actionable HR strategy
  • Translate the HR strategy through constructive initiatives and programs
  • Identify the best ways to attract, motivate, and retain new and existing workforce segments

An effective HR strategy provides a roadmap to create value through the organization's workforce. It also includes guidelines for the organization to follow when competing for new talent or retaining existing talent. These guidelines can cover a broad range of issues, such as which skills and competencies are most critical for achieving future goals and objectives, how to source talent (grow or hire), and how to create and maintain a high-performance culture. Highly geared organizations help focus on people and HR, to identify the most practical ways to get things done and ensure that the human capital initiatives deliver their intended business value.

Align HR products and services

Once a strategic direction has been defined, the organization must review its HR policies, programs and practices to ensure they are aligned with the defined HR strategy.

Step 3: Segment HR customers

Identify the critical workforce segments and tailor specific programs and services.

  • Define and determine which workforce segments are most critical to achieve the desired results
  • Assess the needs of each workforce segment and draw up programs and services tailored to their needs

Step 4: Prioritize HR investments

Identify all HR projects and understand their expected costs, benefits, and primary focus to properly allocate scarce resources.

  • Identify and develop prioritization criteria that are aligned with the organization's strategy and priorities
  • Analyze the cost, benefit and risk of delivering each offering across the workforce life cycle
  • Allocate funding for parts of the people services portfolio

The HR function should focus on value-adding activities to support the execution of the business strategy and objectives. HR leaders are asked more frequently to measure and improve the efficiency and the effectiveness of their HR function. However, understanding and managing sources of cost and value creation can be a challenging task. Several factors need to be taken into consideration, including the key deliverables that are to be used in a selected organization and the investments in HR practices and programs that drive these outcomes. Furthermore, the criteria for prioritizing HR investments need to be defined to ensure the greatest return on investment for the organization. Finally, HR services and activities that should be reinforced or created need to be identified as well as those that should be scaled back or eliminated completely.

Step 5: Design HR services

Design and implement HR solutions that are critical to ensure the execution of the HR strategy for every phase of the workforce life cycle.

  • Perform an HR process analysis, and identify all HR processes that should be streamlined or reengineered
  • Analyze the current people services portfolio, (re) design and implement HR services and solutions

Deliver value

Converting HR strategies and initiatives into tangible business value requires an appropriate delivery approach, a solid foundation of HR capabilities and infrastructure, and the definition of business-driven performance measures to track whether the expected results are being delivered.

Step 6: Ensure right HR service delivery model

Think through people-related business challenges to design the right HR service delivery model.

  • Analyze the current HR service delivery model and assess its ability to effectively meet the organization's needs and objectives
  • Define specific roles, governance mechanisms, and delivery options
  • Identify key delivery enablers such as systems, processes and infrastructure

More than ever it is critical for every organization to question – and if necessary – revise the way the HR function is organized. This implies the assessment of the organization's current and future ability to support the business and to execute the defined corporate strategy. To do so, organizations can rely on a wide range of choices to deliver their HR services and solutions. The starting point of the framework consists of the business and HR strategies and the identification of the unique needs and requirements associated with each customer segment, such as employees, managers, executives or new hires. Next, the framework emphasizes HR's various roles by focusing on how service is delivered through retained and outsourced HR roles. Finally, the required technology and business enablers are identified and considered as key variables in the re-design of the HR service delivery model.

Step 7: Establish right HR capabilities

Identify and build the advanced skills, competencies and capabilities required for HR to fulfill its strategic role.

  • Identify the skills and competencies required to deliver the HR strategy
  • Conduct a skills analysis, develop training and recruiting plans to fill any critical gaps

The HR function plays a central role in delivering people-services solutions to the organization. Therefore, the capabilities of the HR function and its staff are critical to achieve these objectives. Given current trends of centralizing or outsourcing administrative or non-value adding activities, HR leaders are being encouraged to focus on the strategic aspect and added value of HR. To do so, HR leaders must be able to identify and prioritize the key strategic HR objectives that will help their organizations to execute the business strategy.

Step 8: Improve HR operational excellence continuously

Design supporting tools, processes, and infrastructure to help the HR staff succeed.

  • Assess the efficiency of HR-related services and activities through qualitative and quantitative analyses (HR cost and activity analyses)
  • Assess the cost structure of the HR function and control significant long-term and short-term HR-related costs

Step 9: Build the HR brand

Understand and communicate the value of HR to business leaders and key stakeholders.

  • Design, develop and implement an integrated communication process in order to market the HR function within the organization
  • Obtain feedback on the performance of HR, and it should be operating

Step 10: Measure impact of HR products and services

Identify the key performance measures to track the return on investment of HR products and services.

  • Link the corporate strategy, strategic HR priorities and key performance measures for HR and the workforce
  • Identify the right key performance measures and ensure the right balance between value- and -cost- related measures
  • Design and implement an HR Scorecard to track HR impact, value and costs

An HR Scorecard is a tool for measuring the contribution of HR to the overall performance of an organisation. It includes key performance indicators on HR investments, costs, practices and competencies. As HR responds to the challenge of making a greater strategic contribution to the organisation, HR functions are using scorecards in order to manage HR as a strategic asset.

Certainly many challenges lie ahead for HR executives wanting to transform their HR function and optimise the added value of HR. In order to achieve this, an HR Roadmap can be developed which provides a practical guide for the transformation of the HR function.

An HR function that stays focused to this roadmap by aligning its services and capabilities with the organization's business strategy will begin to distinguish itself as a strategic partner – the only viable alternative in today's competitive environment.

Mashooque Ali Bhatti

The writer/contributor is Director Human Resources at the IBA, Karachi, and a former Executive Director for Human Capital Consulting Services, at Deloitte Pakistan

Our Partners