People Strategy

What a people strategy is

A people strategy (استراتيجية الموارد البشرية), also called an HR strategy, is the plan that sets out which human capabilities an organisation needs in order to carry out its plan, and how it will obtain those capabilities, keep them and develop them, over a horizon that extends beyond one year.

How a people strategy differs from an HR plan

An annual HR plan and a people strategy can both mention hiring, training and pay. What separates them is the point from which each one starts.

An annual HR plan is a list of activities. It states how many employees will be hired, how many training courses will be run, and when wages will be reviewed. Each line in it is something to be done within the year.

A people strategy answers a question that comes before any of those activities: which capabilities must the organisation have, without which its plan will not be achieved? The activities are then derived from the answer to that question. In a people strategy, the number of hires, the courses and the timing of a wage review are not starting points. Each of them follows from the capabilities that were named first.

The order is the difference between the two. Whoever starts from the activities can end with a plan that is busy but has no direction. Every line in such a plan can be carried out, but nothing in the plan says which capability that line serves.

Where a people strategy is derived from

A people strategy is derived in five steps, taken in order:

1. The organisation’s plan comes first. The starting point is the plan of the organisation, and specifically what is new in it: what the organisation will be doing over the next two years that it does not do today.
2. That plan is translated into capabilities. Each new element of the plan is turned into the capabilities it calls for: which skills and competencies the work will need, which roles will carry it, and what size the workforce behind it must be.
3. The capabilities are compared with what is already in place. The comparison shows the gap between the capabilities the plan requires and the capabilities the organisation has. This is the step where workforce planning and the skills gap come in. For size, comparing the working capacity required with the capacity available is the subject of capacity planning.
4. A route for closing the gap is chosen. The gap can be closed by hiring, by developing the people already in the organisation, by outsourcing the work, or by redesigning the work itself. Hiring brings the capability in from outside. Developing builds it from the people the organisation already employs. Outsourcing places the work with a party outside the organisation. Redesigning changes the work itself rather than the people who perform it. Each of these is a different answer to the same gap.
5. What will be measured is decided. The last step sets the measures by which the organisation will know that the gap found in the third step is narrowing along the route chosen in the fourth.

The decision a weak people strategy hides

The fourth step is the real decision in a people strategy, and in a weak people strategy it is the step that is passed over quickly. At its centre is one question: build or buy? Building means developing the capability from the people already in the organisation. Buying means bringing the capability in from outside by hiring.

The two routes differ along three axes, and the comparison between them is made case by case:

• The time until the capability is available. It is the period between the decision and the point at which the organisation actually has the capability it needs, measured for each route.
• The cost, calculated in full. It is the cost of each route counted in full, not judged by the wage alone. A wage is one part of what an organisation bears for a role, and the cost to company is the total.
• What happens to the knowledge afterwards. It asks whether the knowledge stays inside the organisation, or whether it enters with a person and leaves with them. Put another way, the question is whether the capability becomes part of the organisation, or is present only for as long as a particular person is.

The comparison is settled in each case on its own facts. It is not settled by a general rule holding that one of the two routes is always faster or always cheaper.

A people strategy that does not say which of the two routes it chose, and why, is not a strategy. It is a statement of intentions: it says what the organisation hopes to have, without committing to how it will come to have it.

What makes a people strategy actionable

Four features make a people strategy something that can be carried out rather than only written down:

• A declared horizon. It is announced, not left implicit, and it runs for two or three years, with a review held halfway through the horizon rather than at its end.
• A limited number of priorities. Any priority beyond that number can end up handed out among units and people instead of being carried out.
• An owner for each priority. It is named as a person, not as a department: a name, not the title of a unit.
• An estimated cost. Each priority carries an estimate of what it will cost. A priority with no budget can be deferred at the first sign of pressure.

The sign of a weak people strategy

A people strategy that would suit any other organisation once its name was changed was not derived from anyone’s plan. The test is to replace the organisation’s name in the document with the name of another organisation and to ask whether the text still holds. If it does, nothing in it came from the plan of the organisation that wrote it.

What makes a people strategy specific to one organisation is its connection to that organisation’s decisions: a market it is entering, a product it is launching, or a sector it is expanding into. A people strategy derived from those decisions also covers what follows from them: roles that did not exist in the organisation before.

This is an explanation of the concept, not legal advice.

Related terms

• Succession Planning
• Capacity Planning
• Competencies
• Contingent Workforce
• Human Capital ROI