At its core, people strategy is a method of workforce planning that lays out your talent attraction, retention, and employee development intentions — both for the present, and in the future.
Successful people strategies drive employee engagement, retention, professional development, and performance that support your organization’s overarching business strategy and bottom line. When done well, people strategy can be your competitive advantage to attract top talent and keep them performing at their best.
The key to getting it right is creating the culture, processes, and policies that enable your employees to thrive.
People Strategy vs. Human Resources
HR has come a long way since its early, mostly administrative origins. But while HR and people strategy can often overlap, they’re different mechanisms that serve different strategic purposes.
Both are essential in supporting business goals. HR focuses on building systems to attract and retain talent, while people strategy focuses more on building relationships between organizations and employees.
Think of HR as the logistical scaffolding for all of your people strategy. It focuses on the operational side of people management, and how the HR department will contribute to your organization’s business outcomes.
- Benefits and perks management
- Talent acquisition processes
- Compensation management
- Workforce planning and budget
By contrast, people strategy is like a roadmap that spans your entire employee lifecycle — think of it as the programs that HR puts into place. Right from onboarding to an employee’s last day, your people strategy is a people-first process focused on talent management, with a goal of providing your employees with everything they need to do their best work.
- Employee engagement
- Professional development and growth plans
- Performance management
- Leadership development
Why Do You Need a People Strategy?
An effective people strategy places employees at the forefront of your organization’s vision — meaning employees know their growth and development are supported throughout their tenure.
And when employees know their professional development is a priority, it leads to a number of benefits that support overall business goals. Employee engagement is likely to be higher, which in turn leads to a high-performing culture and increased productivity. This translates directly into lower turnover, meaning you’re more likely to retain your best talent.
1. Motivate employees to give their best.
Effective people strategies scaffold growth and development at every stage of the employee lifecycle, contributing to a highly engaged, high-performing workforce. And engaged employees don’t just deliver on expectations — they make an effort to give it their all.
“When employers value and encourage their employees, they see increased levels of loyalty,” said Dr. Belinda Wee, associate professor at Husson University’s School of Business and Management. “Employees who know that they are being developed by their companies work harder and stay longer. The investment in time and effort is a great pay-off for companies.”
Research by Gallup shows that engaged employees are 23% more profitable and 18% more productive. They were also 81% less likely to have problems with absenteeism. Investing in your best talent means your employees will give their best — long-term.
2. Enhance the quality of your product and service.
Empowering employees to grow is about giving them the tools, resources, and environment they need to thrive. When your employees feel supported by their leadership and company practices, they’re more likely to develop in areas aligned with business goals. This can trickle into positive outcomes for other business-critical factors, such as product quality, brand reputation, customer experience, and customer loyalty.
“Highly engaged employees hold high regard for the quality of their service for both customers and the organization…They’re also observant of customer needs, which contributes to higher customer satisfaction levels,” said Sherry Mae, Chief Marketing Officer at Tankarium.
Happy, motivated employees are invested in seeing your company succeed — which has a direct impact on the quality of their work.
3. Nurture top talent from within.
Prioritizing employee growth enables organizations to get the most from their workforce. And when it comes to building successful teams, developing talent from within keeps retention, motivation and performance high, while safeguarding your closely-held trade secrets.
“Some knowledge is priceless, so it’s just a much better investment to promote and train current employees,” said Amy McWaters, CEO at The Hamper Emporium. “Succession planning ensures that your company has a history, lasting relationships, and a base of employees who are invested in the outcomes of the company — because the company has invested in them as well.”
Existing employees are familiar with your company’s ins and outs, and are more likely to be self-sufficient and tuned in to organizational goals. They also take less time to ramp into a new role than new hires, meaning organizations can save time and resources on acquiring and training new hires.
4. Create a supportive employee experience.
Over the last few years, HR teams have begun to invest in the employee experience in earnest, with many organizations increasing their spend on mental and physical health as part of their people strategy.
“HR leaders saw a significant change in their job descriptions in 2020… Part of that is now needing to lean in on normalizing mental health in the workforce, ensuring employees know it’s okay to not always be okay at work,” said Julie Gurican, VP People at BenchPrep.
Investing in employee experience becomes complicated (and less possible) during economic volatility. But investing in people’s wellbeing pays dividends for business outcomes — and research shows that it works. A 2019 study on people strategy found a positive link between people strategy, employee wellbeing, and performance. Another study on wellbeing and organizational commitment found that high levels of employee wellbeing have a negative correlation to turnover intention.
Effective people strategy boosts the employee experience by tuning into your employees’ needs and what makes them thrive at work. Long-term, this fosters performance and employee retention.
How to Build An Effective People Strategy
Creating the right people strategy depends on a huge range of factors, including your organization’s size, maturity, business objectives, talent goals, and market locations. But while there’s no definitive blueprint for what works, the best people strategies have a few criteria in common: supporting engagement, performance, communication, and employee connection are top of the list.
When creating your own people strategy, remember that as your organization matures and changes, it’s important to revisit it regularly and adjust it in line with your HR strategy and vision for your employee experience.
1. Prioritize employee engagement and performance.
Employee engagement and performance are at the heart of all successful people strategies. This is because when employees feel connected to your organization’s mission and vision, they’re more likely to give their best in advancing your business.
Decades of research into organizational psychology tell us that driving these two essential pillars of people strategy hinges on a few key factors:
- Meaningful work: Most people crave a working environment that gives them a sense of purpose, competence, and growth. On a basic level, this means we find our day-to-day roles interesting and motivating.
- Autonomy: Employee motivation is strongly impacted by how much freedom we have to get our work done under our own steam.
- Goals: Goals at work inspire engagement, because they give us something to work towards. To be most effective, they must be clear, offer a sufficient level of challenge, and be coupled with feedback.
- Growth: We all have an intrinsic desire to learn. Organizations can foster growth with goals, performance management processes, and L&D strategy.
Employee engagement and performance share a reciprocal relationship — so nurturing one will positively impact the other.
2. Nurture employee growth with structured processes.
Growth is the cornerstone of people strategy, because it ensures employees have a structured, individualized way to improve their skills, take on new responsibilities, learn new competencies, and enhance their performance.
To thrive, employees need exposure to a range of developmental opportunities in addition to regular training, including mentorship and cross-functional experience across different departments in your organization.
Implementing regular, consistent processes around growth and performance will help create structure, so employees never feel like their development is becoming neglected.
Below are a few examples of processes that provide structure for employee performance, growth, and engagement:
- Performance reviews evaluate the extent to which your employees are hitting their goals. These are most effective when carried out regularly.
- Developmental reviews help surface individual career goals and aspirations.
- Individual Development Plans are collaboratively-written documents that lay out short- and long-term career goals.
- Career tracks create structure around role progression.
3. Collect regular employee feedback.
Employee feedback helps you understand your employee experience. It enables you to see which of the initiatives linked to your people strategy are working — and which aren’t. For example, if your employees don’t think their career progression is clear, collecting quantitative and qualitative feedback can help you identify where and how to improve career tracks and promotion cycles.
Collecting feedback also communicates to your employees that you value their opinions, fostering greater psychological safety and trust. Feedback can be collected in a number of ways, including anonymous employee surveys, one-on-one meetings, and exit interviews.
4. Build a culture people care about.
When building a people strategy, think about how it connects and informs the type of organizational culture you want to build. Developing your culture is a long-term process — but it’s shaped by the interactions, behaviors, and norms of everyone in your organization. When done well, it can be your company’s competitive advantage.
Your organization’s culture largely depends on company values, as well as the people you hire. But in addition to engagement and growth, there are a couple of key pillars that prop up a successful people strategy and connect tangibly to business outcomes:
- Commitment to DEIB: Diversity, equity, inclusion, and belonging (DEIB) are key to building a workplace where everyone feels welcome, and can bring their full selves to work each day. Inclusive cultures are known to boost psychological safety, leading to a workplace where everyone feels safe sharing their opinion.
- Support for employee wellbeing: Research consistently shows that a company’s commitment to employees’ wellbeing — including their physical, emotional, and mental health — has a positive impact on profitability and performance. But it also paves the way to greater job satisfaction and organizational commitment.
Examples of People Strategy in Action
In theory, people strategy is about nurturing a specific set of criteria that enables your entire workforce to thrive, whether it’s their first day — or their last. But in practice, that’s going to look very different from one company to the next.
We’ve collated a few examples from our customer stories to help show the impact of an effective people strategy — no matter your size or goals.
Fostering engagement with feedback at Nous Group.
Nous Group, a Melbourne-based international management consultancy, was experiencing challenges with fragmented employee feedback loops. Feedback was only collected biannually — and it involved manual documents stored in multiple different places. This hindered the organization’s ability to get a full oversight of the employee experience.
“We wanted to be less reliant on a twice-a-year feedback cycle and move to an integrated system that supported real-time and continuous feedback,” said Tanya Day, head of OD and resourcing at Nous Group.
Implementing better feedback norms helped Nous Group foster greater engagement and fed into the organization’s culture:
- Increased quality of employee feedback across the organization
- Implemented anonymous peer feedback loops to increase performance
- Improved employee feedback rates
Connecting culture and skills development at Twill.
Digital health company Twill puts culture at the center of everything it does. The organization lives and celebrates its values right from the beginning of the employee journey, from its hiring process through to onboarding, and performance reviews.
As part of its people strategy, Twill mapped its key values onto competencies — meaning everyone at the company understands how to be an ambassador for the organization’s unique culture.
“When we use Lattice for praise or for feedback, we make sure that that’s tied to our values. We use our competencies in our performance reviews and really have fleshed those out so that everyone can see what’s expected and can model the behaviors. So the values don’t just live in a silo,” said Pam Farago Morris, the company’s director of talent development.
Twill connected culture and people strategy by:
- Defining leadership competencies based on core values
- Creating defined career tracks aligned to cultural competencies
- Creating greater ownership over company culture through goals and OKRs
Boosting performance by empowering managers at Linktree.
For Australian company Linktree, employee performance has always been paramount. This is why a key part of the organization’s people strategy focused on not just enhancing performance, but creating the right cultural conditions to make it really take off.
“For us, a high-performance culture measures more than just past performance. It means motivating and engaging our people and building the environmental conditions that make it possible for employees to perform at their best here,” said Beverley Simpson, a Lead HR Consultant for the company. “Employees need to know what to expect and how their performance is being measured, so they can contribute to conversations about their own career and development.”
Linktree linked performance to people strategy by:
- Implementing quarterly career and growth conversations
- Increasing transparency around career progression
- Empowering managers to take charge of team growth
Build A High-Performance People Strategy with Lattice
When done well, people strategy is an effective mechanism that enables you to connect your HR function, business goals, and employee experience more effectively. By optimizing talent development, engagement, and culture, organizations can create an environment that enables their employees to thrive, and create a long-term roadmap that fosters a high-performance culture.
But there is no one-size-fits-all approach to people strategy: Yours needs to reflect your business needs and company culture. And with so many factors to consider, building an effective people strategy that’s optimized for your organization’s exact needs may feel a little overwhelming. But Lattice can help.
Trusted by 5,000+ companies across the globe, Lattice works with people teams to help organizations create workplaces where everyone can thrive. Lattice’s People Strategy Group empowers companies to build bespoke people strategies that modernize processes, identify bottlenecks, and make culture your competitive advantage while boosting business performance.
Coupled with the Lattice platform, which spans people analytics, performance management, employee engagement, compensation management and DEIB, organizations have the insights to truly invest in their people and build an organization that people want to work for. To learn more, book a demo with one of our team members today.