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HR Strategy

7 Steps to develop an effective HR strategy

Develop an effective HR strategy

Have you ever found yourself wondering why and how some companies have all the luck getting the best people? That’s how Mark felt when he reached out to me last year. As with anything in life, luck has very little to do with finding and keeping the best talent. What does help is an effective HR Strategy. In this blog post, I’m going to give you a step-by-step plan on how to develop an effective HR strategy for your business. 

Mark started a private equity firm three years ago with two partners. They each had their roles defined and their motto was “work hard and play hard”. Within a year, they had grown their small team of three into a team of twenty with analysts and researchers at junior and mid levels. 

That’s when the problems started. The work was grueling and the analysts started dropping one by one, claiming long hours, inadequate pay, and a career-stifling work environment. The one female they had hired quit after only two months claiming she’d “had enough” of the misogyny. Furthermore, the work the team was producing was riddled with errors and the partners were reviewing every piece of work. This was a huge time drain.

So, what went wrong? 

Mark and his partners made the classic mistake of “winging” their talent strategy. Mark said to me, “We knew what we wanted to hire and we went out and got it. We figured the work would be interesting enough for everyone to stay motivated and engaged. The truth is I didn’t expect to oversee every little thing our analysts produce –  we just don’t have the time for it.”

No matter how sexy the company or the work, if leaders don’t prioritize working conditions and employee development, good people will leave. So, when Mark came to me, one of the first things we did was develop an effective HR strategy that would work for his company. 

Before we begin, download out our  HR Strategy Creation Guide. Now, let’s go through the steps.

 

Develop an Effective HR Strategy Step 1: Defining the Business Strategy

 

Before we start working on an HR strategy, we need to examine the business strategy. Your business strategy will have your vision, mission and values, as well as a high level overview of what your business objectives are and how you will achieve them. The good news is that most companies spend a decent amount of time on a business strategy and Mark’s team was no exception. 

Typical business strategic plans are over a 3-5 year period. Lately, more and more companies are shortening their strategic planning process because the external landscape changes too quickly for a long time horizon. Seeing 5 years out into the future is virtually impossible these days. If you don’t have a business strategy, I suggest this resource for steps to develop one.

 

Step 2: Figure out what work needs to be done

 

Before you post that first job, you’ll need to know what work needs to be done over the strategic planning period. This is breaking down your business strategy into key buckets of work. It could be one broad task that encompasses all others, or it could be several buckets. Typically the work that needs to be done centres around revenue generation.

In Mark’s case, they needed to close 5 deals, at least one every year, within the strategy plan period. Everything they did needed to centre around that one strategic objective.

When they initially thought about hiring people, it came from a sense of need, rather than any strategy. The three partners were swamped and needed someone to help them. Their first few employees were referrals from business contacts and friends. The rest of the employees were hired during peak busy times when deal work was in full swing. It was no wonder they didn’t work out. 

Mark, his partners and I sat down and hashed out all the work that was involved in closing a deal, from the deal origination to managing portfolio companies. We ended up with five main buckets of work: business development, research, finance, deal negotiation, and portfolio company operations. Keep in mind these are not roles, but groups of roles.

From there, we move on to breaking down the skills needed for each group of jobs.

 

Step 3: Determine what skills are needed to do the work

 

Once you have your buckets of work defined, it’s time to figure out what skills are attributed to each bucket of work. In Mark’s case, we needed people with sales experience in business development, we needed finance and analysis experience for the research and finance buckets, we needed legal and private equity experience in the deal negotiation bucket, and finally, we needed people with board experience, or specific functional experience for the portfolio company operations bucket.

 

Step 4: Determine which people are needed for the jobs

 

Once you know the broad skills needed on the team, it’s time to group those skills into the people needed for each role. At this point, we’re not looking at headcount yet, we’re simply looking at what sort of person we would hire (i.e. what education, experience and personality) in each of those buckets. Doing this exercise upfront makes going through the following steps easier. 

One interesting thing that emerged during my discussions with Mark was that in some of the roles, experience at Mark’s firm was critical to success in the role. So, for those roles, we decided talent had to be homegrown. Getting external people for those roles would only set them up for failure and wouldn’t benefit the company in any way. “Promoting from within” was then a key component of Mark’s HR strategy and we needed to consider how to make it work.

 

Step 5: Evaluate the existing organization

 

Once you know the broad skills needed on the team, it’s time to evaluate whether you have those skills on the current team. This is an important step to developing an effective HR strategy. You need to know what’s happening inside before you outside for talent. In Mark’s case, we looked at his existing team of 17 people, excluding the partners, and assessed the skills they brought to the table. In most cases, the skills matched the roles they were in. For the ones that didn’t, we needed to have a plan to either train and develop them or exit them out of the organization.

 

Step 6: Do an HR SWOT analysis

 

Once steps 1-5 are completed, you’ll be in a position to complete a SWOT analysis. This resources explain what a SWOT analysis is.

Doing a SWOT for your HR strategy is slightly different from doing it for your business strategy. The main thing you need to remember is the strengths and weaknesses are those of your existing internal talent. And opportunities and threats are of the broader labour market. 

Swot Analysis

In Mark’s company, the main strengths were that they already had some homegrown talent. Their weaknesses were that there was virtually no diversity on the team and the partners wanted to correct that. The opportunities in the marketplace were that there was a program dedicated to private equity at the local university and a ready source of fresh talent to choose from. The threats were the other private equity firms in the financial district of their city that were competing for those same resources and losing talent to those companies was a real possibility they needed to account for.

 

Step 7: Put the Strategy together

 

With the SWOT analysis done, the HR strategy pretty much writes itself. You now know what skills you need on your team to successfully implement your business strategy and you know what your internal strengths and weaknesses are as well as your external threats and opportunities. Here is an example of HR strategic objectives

In Mark’s company, we ended up with the following HR Strategy:

  • Attract, develop and retain top talent to facilitate closing 1 deal a year

With these HR strategic objectives:

  • Develop and implement a diversity and inclusion plan
  • Develop and implement an internal promotion plan to keep good employees for as long as possible
  • Build a partnership with the finance program at the local university to get new talent in
  • Develop a compensation plan that rewards high performers and exits poor performers

 

Conclusion

 

Our 7 steps to develop an effective HR strategy is a requirement for any company. With a strong strategy in place, you have a plan for attracting the talent you need to for your business to be successful. The HR strategy also helps to structure your HR practices in a way that is aligned with your business objectives. Download our HR Strategy Creation Guide before you begin this exercise on your own. It will help you keep your notes and thoughts in one place.

One question many leaders ask is how long it takes to develop an effective HR strategy. Developing an HR strategy doesn’t take long, however, the one key to building an effective HR strategy is ensuring that all decision makers in the company are at the table. So, if you’re an HR professional and are facilitating these discussions, this is a non-negotiable.

I’d love to know if this was helpful. Comment below and tell me if you used these steps to create your company’s HR strategy and if you have any feedback. Is the HR strategy you developed helping you attract and retain the talent that you need to execute on your business strategy?

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Executive onboarding

3 Clues That Reveal Company Culture

3 clues that reveal company culture

There are 3 clues that reveal company culture: the people, the processes and the technology.

If you think this sounds too simple, then you would be right. See, the trick isn’t in learning the company culture. The trick is figuring out what to do after you’ve learned it, but that’s a topic for another blog post. 

In today’s post, I’m going to walk you through the steps I take to learn a company’s culture. This is the process I use when I’m called in to do a cultural assessment. The process to learn culture is not complicated, but it does take time and by the end of it, you’ll have a lot of information. This is why I encourage executives to take at least 2 months to go through these steps. Any less and you’ll risk not gathering enough information. Any more and you’ll risk alienating your team because of inaction.

Another suggestion as you go through this process is to keep a notebook for your notes. Believe me, there is no way you’re going to remember all this without recording it in the moment. I use OneNote because I can update it wherever I am. Plus, I type faster than I write. In meetings when it’s not reasonable for me to type away in front of the person, I take a photo of my handwritten notes and upload them to OneNote.

Alright, let’s dive in.

 

Company Culture Clue 1: The People

The first component of culture is learning about the People employed at the company. Now, you’re likely thinking “People” is a pretty broad term, and you would be correct. When I say people, I mean the following things:

  • The personalities
  • The skills
  • The education
  • The experience
  • The mannerisms
  • The treatment of each other
  • The communication style
  • The tone of voice
  • The humour
  • The language
  • The facial expressions

Those are the attributes that make up the “people” part of your organization’s culture. For that matter, these attributes make up the culture of anything. It’s a handy list if you’re a traveler or people-watcher. Figure out what makes people tick, and you’ll have them eating out of your hands in no time. But that’s a blog post for another time.

Next, you’ll make a list of people you’re going to meet. You’ll need a relevant sample of the employees. Include people you would interact with on a regular basis as well as a few others outside your day-today. The idea is to get as broad a perspective as possible. So that you have all the information you need to make up your own mind on the company’s culture. 

At the least you should meet with the following people:

  • your boss
  • your direct reports
  • a sample of your indirect reports
  • all your peers
  • all the board members (if applicable)
  • a sample of suppliers, vendors and partners. 

Your goal at these meetings is to gather as much information as possible around the attributes mentioned above. I have a set of questions I ask, but my all-time favourite is this one: “Tell me about a recent challenging project.” The answers I get back from people is pure gold. You can figure out their personality, how they treat others, and how they communicate with others. Pure. Gold.

 

Clue 2: The Processes

The next thing you need to figure out is the processes. Now, you gather this information in one of three ways:

  1. Ask people about the process
  2. Observe people following the process
  3. Experience the process

The easiest way is to ask people when you’re meeting with them. I like to ask different people the same process question to see if there’s consistency. Inconsistency in following or describing a process tells a lot about the culture. 

One word of caution. I sometimes find executives are too focused on their own area of the organization. They don’t make the effort to ask about other areas or about how different departments interact. When you’re attempting to determine company culture, it’s important to see the full picture.

So, if you’re in operations, you must know the sales and marketing processes. If you’re in HR, you should ask about all the processes in the company. The more senior you are in the company, the more you need to know about how the whole company operates.

Some of the processes I tell my clients to learn about are processes in:

  • the annual budget cycle
  • accounts payable
  • sales
  • marketing
  • operations
  • HR
  • customer onboarding
  • vendor management
  • customer termination

Once you know these processes, you’ll get an accurate picture of the company and its inner workings. If you’re looking to make changes, you need to know how the company currently operates. An added benefit of taking the time to learn and understand these processes is that it shows people you respect them. It shows them you respect where they’re at and how they came to be at that point. There’s nothing more distasteful to current employees than a new leader who starts making changes without acknowledging history.

By now your notebook is no doubt bulging with notes. Or, if you’re like me, you’re OneNote notebook is very colourful. In a future blog post, I’ll show you a neat trick I use to keep all my notes organized.

Ok, we’re at the final stretch of determining your company’s culture. By now you’ve gathered a fair bit of information about the people and the processes.

 

Clue 3: The Technology

Finally, you focus on the technology.

In the past, I didn’t give technology its own “section” in my cultural assessment process. But, over the years, how much and how well a company uses technology tells a lot about its culture. I’ve also realized a company can have the best technology and systems, and still have its people and processes stuck in the 1960s. Vice versa the company can have outstanding people and lean processes and backward technology. 

I’m not going to go into too much detail about which technologies you should evaluate. As you go through your tenure, the effectiveness of the technology should be evident. The main thing you’re looking for is how many of the processes use a technology solution. If the answer is most, then you should look at how effective the technology solutions are. I’ve had clients who depended on technology, but the technology was weak. The CIO had greater aspirations than he had operational excellence in that client’s case!

There you have it. The 3 things that tell you everything you need to know about your company’s culture.  As I mentioned earlier in the post, the process to learn the culture isn’t difficult. What’s complicated is figuring out what to do once you learn everything. 

One thing is clear, though. When you do introduce change, you’ll be able to do it in a thoughtful and respectful way. By the end of this process, you will have met with more people at your company than most new executives. And as a by product, you’ll earn people’s respect because you took the time to listen to them.

Now I’d love to hear from you. What are some of the steps you’ve taken as a new executive or employee? Do you have a process you follow to learn your company’s culture? Comment below and let us know!

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Executive onboarding

Executive Onboarding works

Executive Onboarding

Studies show 40% of executives fail within 18 months on the job due to poor or non-existent executive onboarding.

Not getting a solid executive onboarding means new executives are left alone to figure out “how” things are done at the company, delaying, or worse completely missing, their ability to deliver the results they were hired to deliver.  This is particularly problematic when companies spend hundreds of thousands of dollars on executive recruitment.

The three things that take executives from a tentative, overwhelmed new executive to being a respected authority in the company:

  1. Research the company before you start – when you walk into the company knowing more than most of its long service employees, you’ll feel a confidence that automatically brings out your “A” game
  2. Take the time to relearn critical skills – knowing things like how to listen, change management, influencing without imposing will serve you well.  As leaders go higher up the corporate ladder, it seems those critical skills are forgotten or diluted in the process.
  3. Zero in on three things in the first 6 weeks: the people, the processes and the technology. These are the only 3 things you need to observe to understand the company’s culture: who is employed at the company, how do they do things and what tools do they use to facilitate their work.

This is how one of my clients was able to exceed expectations and get max bonus in her first year while winning over her team and her peers, gaining their respect in the process.  Executive onboarding works and executives need to take back control of their own success in their new job.

If you’ve started a new role in the past 3 months and are ready to fast-track stellar results for yourself, message us for details on how we can get you there.  Our program includes weekly coaching calls for the first year of your employment.  Download our free guide here. Click on our About page to learn more about our history.