Leading organisations across the globe are forced to transform rapidly – and continuously – in order to remain purposeful, relevant and stay ahead of competition. This in turn means that the very definition of people strategy is itself evolving at pace. The role of HR leaders is changing too, and the number of challenges they are asked to solve is increasing. Most likely, when answers are found, the questions themselves will change.
Despite these complexities, it’s worth unpacking the concept of people strategy in terms of definitions, roles and challenges a little better.
Three definitions of people strategy
People strategy has a myriad of different definitions – it depends what you read and where you look. Top Employers Institute’s HR experts and auditors propose three broad lenses:
1. Invest in talent
Let’s first look at people strategy through an investment lens. In this sense, it is seen as an investment in talent. If an organisation matches its investment in talent to business objectives, it is more likely to get the right people with the right skills focused on the right initiatives. The return on investment that this then creates will drive the business forward and accelerate results.
2. Align with business strategy
The second lens defines people strategy in relation to its alignment with business strategy. To think in terms of alignment allows us to ask important questions, such as “What capabilities do we need?” and “Where do we need them?” This simple approach sharpens our understanding of the gaps (or overlaps) in aligning our strategic workforce planning and other HR strategies to the business needs.
Our research shows that 97% Top Employers demonstrate the importance of aligning their people strategy with their business strategy. Yet it is worth noting that only 77% of Top Employers translate their people strategy into key HR metrics and related targets.
3. People strategy is the business strategy
The final lens moves beyond alignment to the complete integration of a people strategy within the business. By this definition, your people strategy IS the business strategy. Here, forward-looking leadership teams explicitly reject thinking about their people as assets. Rather, it is the employees who are the “investors”: they call the shots and choose to invest their precious time, energy and talent. It is the organisation that needs to work hard to keep them engaged and motivated. Leadership cannot take their talented employees’ hard work and commitment for granted.
A strategic role for the HR leader
The definition of people strategy vary greatly across organisations of different shapes and sizes, but research from the Top Employers Institute global survey shows that HR leaders are taking on a more strategic role. In the past, business strategy has been driven largely by the CEO and the CFO. This has been because the twin drivers of organisational success were firmly rooted in strategy and finance.
Now, however, organisations are increasingly moving from this “Dynamic Duo” to a “Transformative Trio”. According to the Harvard Business Review (HBR), the CEO and CFO are being joined more and more regularly by a CHRO who together need “to fuse the strategic, financial and people issues into business strategy”.
Why is this happening? Because organisations, in undertaking their different journeys of change, are becoming less reliant on old structures and hierarchy and more invested in pulling on human levers of talent to achieve the transformation they require and at the speed they need it.
Challenges and priorities
To play their full role in the triangular alliance with CEO and CFO, there are four challenges that the CHRO needs to meet:
- Being able to look ahead and identify strategic workforce challenges that will come about as a result of the changing business world;
- Creating talent supply chains that can support innovation and growth;
- Developing the talent management skills of business leaders;
- Provide insights through greater use of metrics and analytics to show the effectiveness of their people strategy.
It is significant therefore that our latest 2020 research data, obtained from 1 679 certified Top Employers organisations globally, closely resembles the challenges set out in the HBR. When asked to rank their Top HR priorities the majority of Top Employers indicated:
1. Supporting cultural and organisational change
2. The development of talent strategy
3. Leadership development
And the role of technology in providing metrics and analytics within all HR disciplines is, according to Top Employers Institute research, moving up the priority list for HR leaders as way of underpinning significant changes in people strategy that we are seeing within so many of our Top Employer organisations.
Amid the changing HR landscape, the need and the consequent move towards a broader and more holistic scope of people strategy is obvious. It is no longer something that only focuses on talent management but encompasses strategic workforce planning to future-proof the skills and capabilities gaps and is supported by concrete metrics and the likes of predictive analytics. As a result, HR leaders are also expected to devise and execute people strategies that align with the current and future business needs.