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HR strategy

Here CIPD discusses their seven-step framework from "High Performance Work Practices" which links business strategy and skills to performance outcomes
© CIPD

To develop an HR strategy, it’s important to understand the business strategy and how different teams within the business may vary in their approaches to meeting it.

For example, an organisation’s aim may be to improve its customer service. Within this, there may be a need to upgrade IT systems so that employees can better share information, but equally there may also be a need to reduce costs. Understanding the varying needs of different parts of your organisation is key to creating a successful HR strategy.

It should be remembered that CIPD research has shown that individual HR practices alone do not drive enhanced business performance. They can create ‘human capital’ or a set of individuals who are highly-skilled, but this will improve business performance if these individuals have positive relationships with their managers and work in a supportive environment with strong values.

In our seven step framework (link below) from “High Performance Work Practices: linking strategy and skills to performance outcomes” (CIPD 2005) we describe the key stages of forming a HR strategy as:

1. Define the business strategy:  
If the purpose of HR is broadly to support the business to meet its objectives and strategy, HR must have a thorough understanding of this strategy. Better yet, if HR is in a position to inform the strategy and ensure HR issues are understood, it can remove the need for reactive solutions later on. Alt text
2. Analyse the context:  
In order to plan effectively, HR must understand the world the business operates in. To do this, a SWOT analysis can be used. This explores what is and isn’t being done well and how changes can be managed from a HR perspective. Alt text
– If you’d like to find out more about SWOT analysis view the Factsheet via the link in the SEE ALSO section below.
3. Identify business needs:  
Business needs are ways in which the business has to change or improve to deliver on the strategy. HR can find out more about business needs through internal reports or by talking to different areas of the business. Alt text
4. Identify key HR issues:  
It may become apparent that there are issues getting in the way of addressing a business need. If these issues relate to people, then they can be classed as HR issues. This can include things like training needs or a lack of diversity. Alt text
5. Develop the strategic framework:  
Here HR outlines how it can support each of the organisational goals, resulting in a framework that maps to the wider strategy. Alt text
For example, a business goal may be to expand into another country – HR may help achieve this through recruiting experts in the region and bringing existing experienced staff from other offices to support them.
6. Develop HR strategies:  
At this point HR should draw up each of its strategies, explain what resources (financial, people etc.) will be needed to deliver on the HR strategy and produce a timetable for when they will be able to deliver. Alt text
7. Assess HR capability:  
HR will now look at whether they themselves are organised in the right way, have the right skill set or have the right processes in place to deliver on the strategy. It may be appropriate to perform another SWOT analysis to drill down into some of the detail of what’s required. Alt text

Your task

  • If you are currently working, are you able to find out the people strategy for your organisation?
  • In the comments discuss what your role is in delivering the people strategy, or what role you may have played in the past.
© CIPD
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