Tools to Develop Your HR Strategy
An HR strategy often takes shape in a growing business long before anyone formally calls it that.
You are hiring certain people because of where the business is heading. Managers are making decisions about who gets more responsibility. You are working out which skills you need, which behaviours you want to protect as the team grows, where pay needs reviewing and what needs to change if the company is going to get through the next stage without every decision landing back with the founder.
The problem is not usually that there is no HR strategy. It is that those decisions are happening separately.
That starts to matter commercially as an SME grows. Recruitment moves in one direction, management development in another, pay decisions happen when somebody resigns, and organisational structure gets reviewed when there is already pressure on margin or delivery. Each decision may make sense on its own, but together they may not be building the workforce the business actually needs.
The CIPD makes the distinction clearly. Strategic HRM, which it also describes as people strategy, links people management and development practices to long-term organisational goals. Its February 2026 tools go one step further, describing a strategic people plan as a way to translate organisational strategy into measurable business outcomes through workforce capability and performance.
That is the part we think matters most for SMEs.
A people plan should not sit beside the business plan. It should help make the business plan possible.
What is an HR strategy, and what should it actually do?
An HR strategy is a clear view of the people, capability, structure and working environment your business will need to achieve its goals, followed by decisions about how you will get there.
It is not a list of HR projects. That distinction matters.
“Introduce a new appraisal process” is an HR activity. “We need managers to make better performance decisions without everything escalating to the founders” is a strategic business need.
“Review salaries” is an HR activity. “We are losing experienced people in roles that are difficult to replace, and our current pay structure is making that harder” is a strategic problem.
The activity should come after the problem, not before it.
The CIPD describes strategic HRM as a coherent framework covering how people are hired, managed and developed in support of an organisation’s long-term goals. It includes questions around future resourcing, structure, skills, culture, values, commitment, reward and performance. Importantly, the CIPD also says there is no single HR strategy that works for every organisation. The strategy has to reflect the organisation’s particular context, objectives and culture.
We think that point gets missed. You do not need somebody else’s people strategy template filled in with your company name.
You need to work out what your business is trying to do, what that will require from your people and where the gaps are between the workforce you have today and the one capable of delivering that future. That is strategic HR.
Why does HR strategy matter more as an SME grows?
At ten or fifteen people, a lot of People + Culture activity happens naturally.
The founder knows everybody. Performance issues are visible. Recruitment decisions are discussed around the same table. Development happens because somebody spots potential and gives a person more responsibility.
Then the business grows.
You add managers. Teams specialise. The founder is no longer in every meeting. Different managers start interpreting performance, flexibility, promotion and pay differently. Roles that once changed informally now need some clarity because three people are doing versions of the same job.
None of that means the culture has gone wrong. It usually means the business has reached a stage where instinct needs some structure around it.
The CIPD describes workforce planning as a core business process that balances future demand for people and skills against the supply available to the organisation. It also stresses that workforce planning does not need to be complicated and can be adapted to the size and maturity of the business.
We agree. A useful people strategy for an SME could fit on a few pages. The sophistication should sit in the thinking, not the length of the document.
What should come first when you develop a people strategy?
Start with the business.
We would ask questions like:
Where are you trying to get to in the next one to three years?
What needs to be true operationally for that to happen?
Where will growth come from?
What will customers expect from you?
Which parts of the business need to become more efficient?
What capability will become more important?
Where is too much knowledge sitting with one person?
What decisions still rely on the founders?
What could stop the plan from working?
Then move into the people implications.
If revenue is expected to grow by 40%, do you need 40% more people, or do you need different systems and capability? If you are expanding into a new service line, who knows how to deliver it? If you want the founders less involved operationally, which managers need to become stronger decision-makers?
If AI changes parts of the work, which skills become more valuable and which roles change? If margins are under pressure, is the organisational structure still right?
That is HR planning in a form founders can actually use.
The CIPD argues that business strategy and strategic HRM should inform one another rather than people strategy simply following whatever the business has already decided. The available skills, knowledge, capacity and ways of working in the organisation can shape what is commercially possible in the first place.
That is an important shift. Sometimes your people strategy supports the business plan. Sometimes it changes the business plan.
How do you build an HR strategy that is genuinely useful?
We would build it around a small number of decisions rather than trying to cover every possible area of HR. For most SMEs, five areas give you a good starting point.
1. Understand the workforce you actually have
Before deciding what you need, get clear on what exists now.
Who works where and which capabilities are strong
Where vacancies are difficult to fill
Which teams rely heavily on one individual
Where turnover is concentrated
How managers are performing
Where pay has drifted
What your engagement data says
Which roles are likely to change as the business develops
This does not require a complicated people analytics platform. A spreadsheet, your HR system, employee feedback and conversations with managers can tell you a great deal if you ask the right questions.
The CIPD describes people analytics as the use of workforce data to solve business problems and says it is important for strategic HRM because it helps organisations understand outcomes and make better strategic decisions.
The key phrase is solve business problems. Do not measure turnover because HR teams measure turnover. Measure it because you need to know whether losing six experienced people in critical roles is affecting client continuity and creating another recruitment bill.
2. Work out which capabilities the business will need next
Headcount planning is useful. Capability planning is better.
One of the questions we keep coming back to with founders is: What will your people need to be good at in two years that they do not need to be as good at today?
That is often where the real people strategy starts.
You might need managers who can lead larger teams. You might need stronger commercial capability in client-facing roles. You may need more data literacy. Perhaps your business is becoming more international and leaders need experience operating across different markets.
Or automation could mean the value of a role shifts from production towards judgement, relationship-building or interpretation.
The CIPD’s workforce-planning guidance frames this as matching the organisation’s future demand for skills and people with its available workforce. It describes the process as iterative because information about workforce capability needs to feed back into business decisions.
That makes sense to us. You cannot write a three-year business plan and then ask HR how many people it needs. The capability question belongs in the planning conversation from the start.
3. Decide what needs to stay true as the business grows
Growth changes culture whether you design for it or not. We see this particularly in founder-led businesses.
At 25 people, you may pride yourself on quick decisions and direct access to the founders. At 100 people, direct access to the founder cannot be the mechanism through which every important decision gets made.
So the useful question becomes: What are we actually trying to preserve?
Perhaps it is speed. Perhaps it is candour. Perhaps it is commercial responsibility. Maybe it is generosity between teams, client obsession or the willingness to challenge hierarchy.
Once you name that, your people plan can start designing for it through management expectations, hiring, progression, communication and organisational structure.
Culture should not sit in a separate box called “values”. It should influence how the business runs.
What does strategic HR look like in a real growing business?
Case study: the7stars and aligning growth with individual development
JourneyHR has worked with the7stars, the UK’s largest independent media agency, over a long period.
As the agency grew beyond 300 people, one of the challenges was ensuring that employees could still see how their own work and development connected with wider agency objectives. That is a strategy problem.
The organisation had grown successfully, but scale created a risk that teams would become more separate and the connection between individual development and the agency’s ambitions would become less visible.
In 2024,JourneyHR facilitated Team Vision Setting Sessions across all 16 departments. The sessions focused on personal values, communication styles, team ambitions and how each team contributed to company objectives. They also helped teams create development objectives that connected individual growth to wider organisational priorities.
The point was not “run a team workshop”. The strategic question was: How do we preserve alignment and ownership as the organisation gets larger?
The workshops were one response to that question. That is the difference between an HR initiative and a people strategy.
4. How should your people plan connect recruitment, development and retention?
One thing we see quite often is businesses treating these as three separate conversations.
Recruitment sits with one person. Learning + Development gets an annual budget. Retention becomes a discussion when somebody important resigns. But the three are usually connected.
Imagine you want to grow a particular client service. You could recruit experienced people externally every time the team expands. Or you could identify people internally who might be ready for the next level, clarify what capability they need, develop managers who can coach them and build career pathways that make progression visible.
Those choices affect recruitment cost, retention, succession risk and how quickly the business can scale.
The CIPD’s strategic HRM guidance makes a similar point. Individual HR practices do not work in isolation. Their effectiveness depends partly on whether the practices fit together within a broader strategic framework.
That is why a people plan should look across the employee experience rather than producing disconnected projects.
Recruitment should reflect the capability plan. Development should reflect future roles. Performance expectations should reflect business priorities. Reward should support the behaviours and skills you value. Engagement should tell you whether the experience you intended is the experience people are actually having.
None of those needs to become complicated. They just need to join up.
5. How does organisational design fit into an HR strategy?
Sometimes the answer is not more people. We think this is one of the most commercially important parts of strategic HR.
A business can outgrow its structure without immediately recognising it.
You see duplicated responsibility. Senior people spend too much time approving minor decisions. Teams that once worked closely begin pulling in different directions. Managers accumulate direct reports because nobody has stopped to reconsider the shape of the organisation.
Then revenue tightens and suddenly the question becomes headcount. We would ask about structure earlier.
Who needs to make which decisions? Where does accountability sit? Are there management layers that genuinely add value? Which roles exist because the business needs them today, and which exist because that is how the organisation grew? Where does capability sit?
Case study: connecting structure to commercial reality
JourneyHRsupported an SME of around 80 employees after an earlier period of ambitious growth.
The business reviewed its operating model and concluded that its existing structure had become inefficient. It needed to streamline operations and return the company to a more profitable footing. The proposed restructure put more than 20 roles at risk.
JourneyHR worked with the company on the organisational structures, people impact analysis, role pools, selection criteria and collective consultation process.
There is an employee-relations process in that story, of course. But there is a strategic lesson before it. Workforce structure cannot be separated from the commercial model.
If you only involve People + Culture once the new organisation chart has already been decided, you miss the opportunity to challenge whether the proposed structure gives the business the skills, accountability and capacity it actually needs. We would much rather have that conversation earlier.
What role should managers play in your HR strategy?
A big one.
You can write an excellent HR strategy and still watch it disappear in practice if managers do not have the capability or time to deliver it.
Managers translate a people strategy into everyday experience. They decide whether expectations are clear. They notice performance. They allocate work. They give feedback. They interpret policies. They influence whether somebody sees a future in the company.
They also hear things senior leadership often does not. That makes management capability a strategic issue, not simply a Learning + Development topic.
If your business plan depends on teams becoming more autonomous, your manager-development plan should reflect that. If you need higher productivity, look at whether managers can set priorities and deal with underperformance. If you want stronger retention, understand the quality of one-to-ones, feedback and career conversations.
A people strategy that says “develop our managers” is too vague. A useful people plan says what managers need to be capable of doing differently because of where the business is going.
How should HR planning respond when the business keeps changing?
Do not treat the strategy as finished. That is probably the simplest answer.
You can build a good people plan in September and find that by March a major client has left, you have acquired another business, AI has changed part of your operating model, your growth assumptions are different, or one senior hire has changed what is possible.
The answer is not to stop planning. It is to review the plan.
The CIPD describes workforce planning as an iterative activity, with workforce information continually feeding into future business decisions. Its wider strategic HRM guidance also makes clear that strategy needs to respond to the evolving nature of work and organisational circumstances.
We would usually keep the broad direction fairly stable and review the assumptions underneath it. You might still want to become less founder-dependent, but the way you achieve that could change. You may still need stronger commercial leadership, but perhaps the answer is now developing somebody internally rather than recruiting.
The strategy gives you the direction. The plan should be allowed to move.
How can an SME measure whether its people strategy is working?
Start with the outcome you were trying to change.
If the people strategy exists to improve management capability, do not measure only how many people attended management training. Look at performance conversations, employee feedback on managers, retention within teams, manager confidence, absence, grievances and whether decisions are escalating less often.
If the strategy is designed to strengthen succession, look at internal appointments and critical-role coverage. If you want to reduce recruitment dependency, track time to fill alongside internal progression and retention. If organisational design was intended to improve productivity, decide which commercial or operational measures should move as a result.
The CIPD’s 2026 HRstrategy tools are built around developing, communicating and tracking a strategic people plan that aligns with organisational strategy and business outcomes.
That last part matters. A People + Culture team can complete every activity on its annual plan and still fail strategically if nothing important in the business changes.
We would rather see three priorities with measurable consequences than fifteen completed HR projects.
What are the most common signs that your HR strategy needs revisiting?
A few patterns tend to get our attention.
You are repeatedly recruiting the same roles.
Good people cannot explain what progression looks like.
Managers apply standards very differently.
The founders remain involved in decisions they expected to have delegated by now.
Pay decisions happen mainly in response to resignations.
Employee engagement differs significantly between teams.
Senior leaders cannot agree which roles or skills will matter in two years.
Your organisation chart reflects history more than future need.
HR spends most of its time dealing with issues after decisions have already been made.
Any one of those might be manageable. Several appearing together usually tells you something broader about the system.
That is when it can be useful to stop fixing each symptom independently and look at the people strategy underneath them.
How does strategic HR become commercially useful rather than an HR exercise?
Bring People + Culture into business decisions earlier. We think this is one of the simplest changes a growing organisation can make.
If Finance decides the cost envelope, Operations designs the structure and HR gets invited in to deal with the people consequences afterwards, HR cannot do much strategic work.
The better conversation brings together commercial goals, financial constraints, operational requirements, workforce data, capability, legal risk and employee experience.
That lets you ask better questions before money or roles have been committed.
CIPD discussions on the strategic role ofHR in 2026 have made a similar point. In its HR People Pod, contributors stressed that people priorities need to be the business’s priorities and that HR needs close enough contact with the business to understand its future direction and drivers.
We think that is exactly right. Strategic HR should not need to manufacture relevance. Its work should start with the problems the organisation is already trying to solve.
When should an SME bring in outside support to build an HR strategy?
Usually when the people questions are becoming more strategic than one person has the capacity or experience to hold.
That could be because you are growing quickly. Perhaps you have an excellent HR Manager who is consumed by operational work. Maybe the founders are still making most of the senior people decisions themselves.
You could be planning a restructure, opening another location, professionalising management or trying to understand what capability the next stage will require.
An external People + Culture partner can be useful because they are able to look across the system.
At JourneyHR, our retained model works particularly well for organisations of around 25 to 200 people whereHR needs are increasing, but the business may not need a full internal team covering strategic, specialist and operational work. Our model gives clients access to HR Director-level thinking alongside consultants who can help turn the strategy into day-to-day practice.
Before starting a retained relationship, we often use an HR Health Check and Employee Engagement Survey to understand the existing People + Culture foundations and how employees experience the organisation.
We find that gives the strategy somewhere real to start.
How JourneyHR can help
A useful HR strategy begins with your business rather than with a generic list of HR priorities.
We work with founders and leadership teams to understand where the organisation is going, what could get in the way and what the next stage will require from your people.
That can include workforce and succession planning, organisational design, management capability, employee engagement, career frameworks, Pay + Benefits, recruitment strategy, values and wider People + Culture planning.
Sometimes you need help building the strategy. Sometimes you already know the direction and need experienced people to turn it into a practical people plan.
And sometimes the biggest value is having somebody in the room early enough to challenge the people implications of a commercial decision before the decision becomes difficult to change.
Our RetainedHR Support + Services model gives growing businesses an embedded external team with both strategic and practical capability.
Get in touch:JourneyHR Retained HR Support + Services orContact JourneyHR
Final thought
What we keep coming back to is that an HR strategy does not need to make HR look strategic. It needs to make the business stronger.
If you know where the company is going, what capability that future needs and what has to change in the way people are hired, developed, managed and organised, you already have the beginnings of a useful people strategy.
Write that down. Make some decisions. Then keep coming back to it as the business changes.
FAQs
What is the difference between an HR strategy and a people strategy?
In practice, the terms often describe the same underlying idea. The CIPD uses strategic HRM and people strategy to describe a framework connecting how people are hired, managed and developed with long-term organisational goals. A useful strategy covers more than HR processes. It looks at the workforce, capability, structure, culture, management and employee experience required for the business to achieve what it is trying to do.
What should be included in an HR strategy for an SME?
Start with the business objectives, then identify the people implications. Most SME HR strategies should consider future skills and workforce requirements, organisational structure, management capability, recruitment and retention, career development, reward, employee engagement and the People + Culture foundations needed to support growth. You do not need a long document. The priorities should be specific enough to guide decisions and connected to measurable business outcomes.
How often should a small business review its people strategy?
Review the assumptions at least annually and revisit the plan whenever something material changes in the business. Growth, acquisitions, major client wins or losses, new technology, restructuring and changes in senior leadership can all alter workforce requirements. The CIPD treats workforce planning as an iterative process because information about capacity and capability needs to keep feeding back into organisational planning rather than being reviewed once every few years.
How do you measure whether an HR strategy is successful?
Measure the business or workforce outcome the strategy was designed to change. That could include retention, internal progression, critical-role coverage, recruitment cost, manager effectiveness, engagement, absence, productivity or reduced dependence on founders for day-to-day decisions. Activity measures such as courses completed or policies introduced can be useful, but they do not tell you whether the strategy worked. The measure should connect the people activity to an organisational result.
When does an SME need a formal people plan?
A formal people plan becomes useful when informal decisions stop joining up. Common signs include rapid growth, inconsistent management, repeated recruitment for the same skills, unclear progression, increasing founder dependence or a business plan that requires capabilities you do not currently have. The plan does not need to become corporate. Its job is simply to make the people decisions needed for the next stage clear enough that leaders can act on them consistently.
