Yoram Solomon, PhD
Building HR (and Other) Strategies Like You Use Your GPS
The Human Resources function, and the Human Resources department, like any other department or business unit within the company, is a business. It’s a business that deals with the most essential part of the company: its people. It’s not a profit center for the company, at least not a direct one. At the same time, not all departments in the company generate profits. But just like any other business, it must have a strategy. Otherwise, it will be pulled in multiple directions and be unproductive and ineffective.
In this article, I will adapt my strategy development process to the Human Resources department. The analogy I use when facilitating strategy workshops is the GPS navigation system in your car, and I will start by defining strategy.
What is strategy?
Whenever I open a strategy development workshop, I ask, “what is strategy?” You might be amazed by the answers I got. One day I decided to use an analogy. It was a hot August day in Texas, and at 8 AM, we started a workshop that would end around 4 PM. “It’s a hot day,” I said, “who here parked their car in the shade?” Most people raised their hands, looking around, feeling confident that they now understood what strategy was. It’s understanding that parking their cars in the shade will make their car cooler and that they acted on it. I asked them to lower their hands and asked, " Who parked their car where the shade will be at 4 PM?” This was the moment they understood what strategy was.
Furthermore, a strategy should not be presented as a complex, 40-page document that will be put on a shelf and never referenced. Many companies develop such documents mainly to satisfy the needs of their supervisors. A strategy should be a simple, one-page document that will easily be remembered and acted upon daily, guiding employees when making decisions.
Who is responsible for developing the HR strategy?
Often people think that the top executives, whether the CEO, the executive leadership team, or the VP of HR (or CHRO), are responsible for developing the HR strategy. I firmly believe that the responsibility lies with those affected by the strategy, those responsible for executing it, and those who can provide input to it (the latter are only responsible for giving such input rather than taking part in developing the strategy). When people take part in developing the strategy, they also “own it.” But when creating the HR strategy, it must be done in a way that harmonizes it with the overall company strategy and values.
To develop a strategy, I chose another analogy: the GPS (Global Positioning System) navigation system in your car, through the 7 steps of operation.
Step 1: Acquiring satellites / Know where you are
Many people don’t know that their navigation system is not ready to work or accept a destination before knowing where it is. The same applies to strategy. You cannot build a meaningful strategy if you don’t clearly identify where you are right now. The old SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis could work well as long as you are true to yourself. The “where are we?” step is not the place for bragging. It’s the place to identify the areas your strategy must focus on. Look for the areas you want to improve on. Identify the metrics you should use and use them to measure the current state of those variables. One example would be identifying that the employee turnover is currently 40% annually.
Step 2: Enter Destination / Where do you want to be?
First, you will have to choose an appropriate time horizon. If it is too short, you will miss strategic opportunities to make real change. If too long, there might be too many changes that would force constant strategy course corrections. Different industries would have different dynamics that would suggest different time horizons. Start with a strategic intent statement (or a mission statement, or goals, or objectives. The name doesn’t matter) that is clear enough, specific enough, and meaningful (the test for a meaningful strategic intent statement is to take any component of it and see if the opposite makes sense. If the opposite is absurd, then the original is meaningless). An essential part of determining a valid destination is considering how the environment would change within the time horizon (“where the sun will be at 4 PM”). You can use forecasting processes such as scenario planning of business war games. You may ask questions such as: what will the industry do? How will artificial intelligence (AI) affect the workplace? How will remote work preferences change? Will we go to a 4-day work week? Etc. You must be pragmatic in this step and identify what you know as a fact versus what is an assumption. Your destination should use the same metrics you used to determine where you are. For example, a strategic intent could be to reduce employee turnover from 40% annually to 20% within 3 years.
Step 3: Route preferences / Define boundary constraints
When you navigate, you must provide the navigation system with boundary rules that will guide how it calculates the route. For example, you may want to choose the fastest route, the shortest route, the toll-free route, the scenic route, etc. When developing a strategy, you have boundary constraints too, and this is the time to identify them. Are the budget constraints? Timing constraints? When creating an HR strategy, you might be constrained by legal issues; how fast can we recruit people? How quickly can we train new employees? Any layoff restrictions? Etc.
Step 4: Calculating a route / Strategy rules
Once the navigation system knows where it is, where you want to go, and your route preferences, it will calculate the most optimal route. Unfortunately, when it comes to strategy development, this step is manual and possibly the most critical step in developing a solid strategy. A 2001 Harvard Business Review article by Kathleen Eisenhardt and Donald Sull described a great framework to use, Strategy as Simple Rules. They propose to have 2-5 simple rules out of 5 types of rules: how-to rules, boundary rules (addressed in step 3), priority rules, timing rules, and exit rules. You may encounter no path from where you are to where you want to go within the defined boundaries. If that happens, you may have to revisit your destination or boundary rules (you can’t change where you are). Do that judiciously. Alternatively, you may find that there is more than one way to get to your destination while complying with the boundary rules. Choose the most optimal one. Those rules should be simple and occupy a few sentences on a single sheet of paper. They will guide decisions within the time horizon defined for the strategy.
Step 5: Drive / Execute the strategy
You never drive blindly. You observe any unexpected and unplanned changes. You are in the driver’s seat, and the ultimate decision on driving and turning is yours. You may force a detour because conditions warrant it. The same applies to strategy. Everyone in the organization must follow the strategy. It is easier if they took part in creating it and thus feel ownership of it and a vested interest in its success. Keep everyone informed. Monitor the metrics you have set. You don’t want to find only at the last moment that you are significantly off course. If something unexpected happens that has the potential to affect your ability to reach the destination, raise a red flag.
Step 6: Recalculating / Detour
Every now and then, unexpected road conditions would force your navigation system to have to recalculate an alternate route. It recalculates the route only from the current location to the same destination. The detour could be forced by you, the driver, if you decide to deviate from the driving instructions. The same happens with strategy. Whether it is a conscious decision or, often, driven by external events, you must recalculate the new route. It might happen because the planned strategy is not yielding the expected interim results. Maybe even because one of your basic assumptions turned out to be wrong. You must first take inventory of where you are now. You may need to challenge whether your destination is still the same, and you may have to revisit your boundary constraints. When a significant detour such as this happens, you must go back to step 1, although you will typically only be looking to modify the different steps rather than start from scratch. Don’t force a detour just because you can. Changing the strategy too often reduces the value of having a strategy, to begin with.
Step 7: How do you know that you got there?
It’s easy for the navigation system. Within a short distance from the destination, the system will declare “arrived at destination” and stop giving directions. With strategy, if you define your destination well (for example, reaching a turnover rate of 20% or better), you can measure it. Ensure that your measurement is accurate and that you are not relying on a temporary result. Typically, it would be best to revisit the strategy every period of time, say 3 to 5 times within the time horizon. If your strategy time horizon is 5 years, it will make sense to revisit it every year. If your time horizon is 3 months, it will make sense to review it every month. Do it to ensure your destination is still where you want to go, that the boundary restrictions are still in effect and haven’t changed, and that the strategy rules are still effective in getting you to the destination. As you get close to the destination (say 70-80% there), you may want to start thinking about your next destination and modify the strategy. Unlike the navigation system, you continue to drive after reaching the interim destination.
Want to hear more? Listen to this week's podcast episode:
Part 1: https://podcasts.apple.com/us/podcast/s8e11-building-hr-strategies-like-you-use-your-gps-part-1/id1569249060?i=1000604107786
Part 2: https://podcasts.apple.com/us/podcast/s8e12-building-hr-strategies-like-you-use-your-gps-part-2/id1569249060?i=1000605152572
Dr. Yoram Solomon is an expert in trust, employee engagement, teamwork, organizational culture, and leadership. He is the author of The Book of Trust, host of The Trust Show podcast, a two-time TEDx speaker, and facilitator of the Trust Habits workshop and masterclass that explains what trust is and how to build trust in organizations. He is a frequent speaker at SHRM events and a contributor to HR.com magazine.