People Strategy: What Is It and How to Make One?

by Srikant Chellappa Apr 11,2024

The People Strategy Leaders Podcast

with Srikant Chellappa, CEO

In the current strategic landscape of organizational management, “people strategy” has become a vital approach for companies to survive in a fast-moving and changing market. At its core, a people strategy pertains to the deliberate design and implementation of initiatives to effectively manage an organization’s most valuable asset: its people. The strategic plan embeds human resource management practices within a holistic framework, building a bridge between human resources and organizational goals.

Formulating an effective people strategy entails a multifold process that starts with a detailed grasp of your organization’s mission, goals, and employee working dynamics. By aligning people practices with the company strategy, businesses can foster employee commitment, productivity, and engagement.

Organizations with a great people strategy observe enhanced employee engagement (64%) and job security (65%) among employees. In this blog, we will explore all the people strategy elements characterized by talent acquisition, development, and retention.

Also read: The Future of HR: Identifying 7 Evolving Roles and Strategies to Secure Them

What Is a People Strategy?

A people strategy is a comprehensive plan that outlines how an organization intends to manage and develop its workforce to achieve its business objectives. It encompasses various aspects such as recruitment, retention, training, and performance management. The strategy aims to align the organization’s goals with the needs and capabilities of its employees, ensuring that talent is effectively utilized and developed. It is, however, different from a human resources strategy.

A human resources strategy is a unified method for managing and developing a company’s human assets in line with its long-term goals. A people strategy underlines a more developed philosophy that sees employees as core strategic assets, unlike traditional HR strategies that mostly concentrate on technical operations like recruiting, salary, and compliance.

A people strategy includes operational aspects related to staff management, such as engagement, training, and performance management. It also evaluates the organizational culture, values, and leadership styles, with the main objective of creating a platform where employees are appreciated, engaged, and motivated to attain organizational objectives.

A people strategy has the following three elements:

  • Leadership & Culture: This includes creating a sound organizational culture and a leadership direction that is consistent with the company’s values and vision. It implies building leadership skills at all levels of the enterprise.
  • Talent & Skills: This element pivots on attracting, retaining, and developing the right skills along with the necessary knowledge and competencies that can drive organizational performance. It encompasses talent acquisition, career development, succession planning, and skills training to ensure the organization maintains a skilled workforce.
  • Human Resources (HR): HR functions are part of the overall people strategy. This aspect concerns transforming HR practices to be more strategic and proactive in dealing with issues that affect the achievement of organizational goals. It involves tactics such as HR analytics, employee design experience, and performance management, which enable HR to implement business strategies.
Also read: HR Development (HRD) vs HR Management (HRM) – Key differences

Why Do You Need a People Strategy? (Benefits)

A people strategy is essential for organizations seeking to thrive in today’s competitive business landscape. Here are some key benefits of having a people strategy:

  • Attract and Retain Top Talent: A well-defined people strategy helps attract high-caliber employees by showcasing the organization as an employer of choice. Companies can retain top talent by offering competitive compensation, opportunities for career advancement, and a supportive work culture. This strategy reduces turnover costs and maintains a skilled workforce.
  • Boost Employee Engagement: Engaged employees are more productive, innovative, and committed to achieving organizational goals than non-engaged ones. A people strategy that focuses on fostering a positive work environment, providing meaningful work, and recognizing employee contributions can significantly boost engagement levels. It leads to higher performance and retention rates.
  • Achieve Business Goals: Aligning people strategy practices with business objectives is crucial for driving organizational success. A people strategy ensures that the workforce is equipped with the necessary skills, capabilities, and motivation to execute strategic initiatives. It leads to improved performance, profitability, and sustainable growth.

Examples of organizations that boast of their people strategies include: 

  • Google: Renowned for its innovative and employee-centric culture, Google invests heavily in its People Strategy. It offers perks such as flexible work arrangements, professional development opportunities, and attractive benefits packages. This approach has helped Google consistently rank among the top employers globally and maintain high levels of employee satisfaction and retention.
  • Zappos: Zappos, an online shoe and clothing retailer, places a strong emphasis on its people cultural strategy and employee happiness. Through initiatives such as the “Zappos Family Core Values” and a unique hiring process that focuses on cultural fit, Zappos has created a highly engaged workforce that delivers exceptional customer service, contributing to its success as a customer-centric organization.
Talent Management Software
Also read: Careers Spotlight: What Is an HR Generalist?

How to Build a Winning People Strategy

Here are actionable steps to guide you through how to develop an effective people strategy:

Step 1: Align with Business Goals

Recognize that any organization’s success depends on its people. Aligning the people strategy with business goals ensures that human capital initiatives directly contribute to achieving organizational objectives, whether increasing revenue, expanding market share, or enhancing customer satisfaction.

Anticipate future skill requirements and talent gaps by forecasting the organization’s needs. Consider factors such as technological advancements, industry trends, and demographic shifts to ensure the workforce remains agile and adaptable.

Step 2: Assess Your Current Workforce

Conduct a comprehensive assessment of the existing workforce to identify skills gaps and areas for improvement. Utilize tools such as skills assessments, performance evaluations, and employee feedback surveys to gather insights into the current talent landscape.

Also read: Essential Skills Every HR Professional Should Master

Step 3: Develop Your Strategy Framework

Define key focus areas within your people strategy, such as recruitment, training, performance management, and employee engagement. Develop targeted initiatives and action plans for each focus area to address identified talent gaps and support organizational goals.

Step 4: Implement and Monitor

Implement initiatives systematically, considering factors such as resource allocation, timeline, and stakeholder engagement. Communicate the rationale behind each initiative and provide adequate support and resources to ensure successful implementation.

Establish key performance indicators (KPIs) and metrics to track the effectiveness of your people strategy initiatives. Monitor progress against these metrics regularly and gather feedback from employees and stakeholders. Use data-driven insights to adapt and refine your strategy as needed to ensure continued alignment with business objectives and evolving talent needs.

Also read: Top 7 Productivity Hacks Used by Successful HR Leaders

People Strategy Best Practices (Pro Tips)

Here are some pro tips to enhance your people strategy:

  • Data-Driven Decision Making

Utilize data analytics to inform your people strategy initiatives. Collect and analyze relevant workforce data to identify trends, uncover insights, and make informed decisions about talent management, recruitment, training, and performance management.

  • Foster a Culture of Learning

Encourage continuous learning and skill development among employees by providing access to training programs, workshops, and educational resources. Create a culture that values curiosity, innovation, and personal growth, fostering an environment where employees feel motivated to enhance their skills and knowledge.

  • Prioritize Diversity, Equity, and Inclusion (DE&I)

Recognize the importance of diversity, equity, and inclusion in driving organizational success. Foster a diverse and inclusive workplace where all employees feel valued, respected, and empowered to contribute their unique perspectives and talents. Implement DE&I initiatives that promote fairness, equality, and opportunities for underrepresented groups.

Also read: Which HR Roles are Most Likely to Be Replaced by AI?

Summing Up

Crafting a robust people strategy is paramount for any organization aiming to thrive in today’s dynamic business landscape. By aligning organizational goals with the development and well-being of its employees, companies can foster a culture of engagement, innovation, and sustained success. Through careful consideration of recruitment, talent development, retention, and diversity initiatives, a well-rounded people strategy can drive productivity, boost morale, and ultimately propel the organization toward its objectives.

Performance Management Tool

Frequently Asked Questions

  • What role does technology play in supporting a people strategy?

Technology can play a significant role in supporting various aspects of a people strategy, such as recruitment, performance management, training and development, and employee communication. Leveraging HR software and analytics can help streamline processes, improve decision-making, and enhance the overall employee experience.

  • How can small businesses or startups develop a people strategy on a limited budget?

Small businesses or startups can develop a people strategy on a limited budget by focusing on essential elements such as clear communication, offering opportunities for growth and development, providing meaningful feedback, creating a positive work culture, and leveraging low-cost or free resources like online training platforms, networking events, and mentorship programs.

  • What are some common challenges organizations may face when implementing a people strategy?

Common challenges may include resistance to change, a lack of alignment between the people strategy and overall business goals, and difficulty measuring the impact of HR initiatives. Effective communication, leadership buy-in, and ongoing evaluation can help address these challenges.

Subscribe To The Engagedly Newsletter

Srikant Chellappa
CEO & Co-Founder of Engagedly

Srikant Chellappa is the Co-Founder and CEO at Engagedly and is a passionate entrepreneur and people leader. He is an author, producer/director of 6 feature films, a music album with his band Manchester Underground, and is the host of The People Strategy Leaders Podcast. He is currently working on his next book, Ikigai at the Workplace, which is slated for release in the fall of 2024.

Privacy Preference Center