How to Create a Strategic HR Plan For Your Small Business

Eric Mochnacz
August 25, 2023

The goal for any small business owner is to build a successful company.  It’s important for business growth to be methodical and strategic.  Most, if not all, business decisions impact your people.  Strategically aligning your business plan with HR strategy is critical for ongoing success.  How do you align your business and human resources strategies and why is it important?  Read on for the insight.

What is a Strategic HR Plan? 

A strategic HR plan is a comprehensive and forward-thinking plan aligning the human capital function with overall business goals.  This ensures human resources is effectively managed to contribute to the overall success of the business and connected to broader strategic business outcomes.  An effective HR management plan connects the different HR responsibilities and essential employee lifecycle processes with the overarching business strategy.  Simply put, a strategic HR plan is human resources’ effort to establish a roadmap so their efforts work in parallel with your small business’s efforts towards success. 

Why Your Small Business Needs a Strategic HR Plan 

Assuming the goal of your small business is to scale, it’s critical you have a strategic approach to ensuring HR grows in tandem with the overall business.  You need a strong HR infrastructure to support your growth.  You may think that because your operations are smaller than your larger competitors you don’t need to be strategic, but the challenges and complexities related to employee management still exist.  The way you proactively address those people challenges is by developing a strategic human resources management plan.  

How to Develop a Strategic HR Plan 

Creating a business-aligned HR strategic plan requires a systematic and thoughtful approach.  First, identify and establish a deep understanding of the organization’s strategy, goals and objectives.  This also means clearly articulating the company’s mission, vision and metrics for success.  Identify the key HR priorities that directly contribute to the achievement of defined business goals.  Align the HR objectives with the business goals.  The HR lead should be seen as a critical resource to the growth of the business and be integrated into the leadership team.  Understand the reciprocal influence each has on the other.  Employee lifecycle processes from recruitment to offboarding (and everything in between) impact business performance towards strategic objectives.  

Once you’ve developed the roadmap, establish milestones and KPIs for your plan.  Allocate internal resources to support established initiatives.  Measure progress towards SMART goals to confirm ongoing plan effectiveness.  Establish buy-in for these initiatives by communicating regularly with stakeholders about the goals and progress of the initiatives.  Build in regular checkpoints to evaluate progress and adjust if necessary.  An effective strategic plan allows for flexibility and agility to adjust to changing business needs or unexpected obstacles.  Focus on continuous improvement and ongoing assessment to shift current priorities or create new goals as you meet plan milestones.  

What are some examples of goal alignment?  If your business is looking to move into a new vertical, you will need staff to support the business expansion.  Work with HR to strategically workforce plan and ensure your recruitment process supports headcount growth.  If you need salespeople to venture into the new vertical, HR supports establishing your pay philosophy to appropriately compensate your sales team through base pay and an effective commission structure.  Once you’ve hired the new people to support the vertical, effective employee onboarding and retention strategies support ongoing client success and vertical growth.  This is one illustration of how aligning HR strategy with business goals is conducive to overall business success. 

Outsourced HR May Be the Solution For You

As a small business, you know you need HR, but you may not need full-time human resources.  That’s why Red Clover’s outsourced HR solution may be the most effective solution for you and your business.  As you determine goals for your business, our consultants work closely with you to align your business strategy with your people strategy.  Establishing HR infrastructure for your business in the early stages creates a strong foundation for business scale.  If you’re not sure where to start with your strategic HR plan, reach out today. 

Photo Credit – Photo by JESHOOTS.COM on Unsplash

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