HR Strategy

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How Your Business Size and Style Impacts HR Strategy

Human resources (HR) strategy encompasses necessities like hiring, retention, employee growth opportunities, and benefits packages. However, the specifics for how your HR strategy accomplishes those needs and engages with employees vary based on a company’s size — and sometimes, its structure and style. For example, particular federal labor requirements come into effect for companies with workforces of certain sizes. HR professionals must abide by those when applicable.

Plus, the amount of resources available to an HR professional often varies according to a company’s budget. Similarly, a business could probably have a much broader or complex strategy if it had an HR department rather than one person handling all responsibilities.

Here’s a look at different business types and how they could influence an HR strategy…

1. Large Businesses

HR representatives at large companies are especially likely to connect their strategies to a company’s overarching goals. The resources and expertise associated with big companies often make it easier to determine what works and what doesn’t.

For example, Cadbury is one of the world’s largest confectioners. Its history dates back to 1824. Even in its early stages, the company explored how to invest in its staff. For example, the brand had a “worker village” where employees and their families could live. Today, the company’s HR strategy aligns with Cadbury’s goals, and people remain a priority.

Many large companies also want to see those investments pay off. They may be more likely to use productivity trackers to pinpoint top performers and the workforce members requiring corrective coaching.

Artificial intelligence (AI) tools for HR are also popular at large businesses. Strategies may include using it to find the most qualified candidates or show which employees are upset and may leave soon without intervention.

2. Employee Stock Ownership Plans (ESOPs)

Companies run under the employee stock ownership plan (ESOP) style allow workers to own shares. This approach has numerous benefits. For example, one study shows that ESOPs grew more than 5% faster than non-ESOP companies. Employee morale and productivity can rise, too, especially as workers recognize the direct link between their contributions and company success.

The HR strategies associated with ESOPs often focus on reminding current or potential employees of this business type’s benefits. For example, Chicago’s West Monroe Partners is a consultancy that became an entirely worker-owned enterprise via an ESOP in 2013.

Managing director Nate Ulery offered insight into the specifics. “Anyone who is an employee in a plan year with at least 1,000 hours of service receives shares,”  he said. The allocation of shares varies based on an employee’s salary and their length of time. Ulery confirmed, “We feel equity should go to those who have decided to spend a significant period of time at the organization.”

Employees at ESOPs also typically receive other benefits, such as the opportunity to sign up for 401(k) plans. That means an HR strategy should focus on attracting and retaining workers in other ways while simultaneously clarifying an ESOP’s advantages.

3. Small and Medium-Sized Businesses

Whereas many large businesses have in-house HR teams, that option is out of reach for many entrepreneurs who run small businesses. Some of them initially try to handle all the HR duties themselves. Soon, they realize that creating and upholding their strategies requires help from outsourced providers.

They conclude delegating responsibilities helps them focus on other aspects of their businesses. For example, if an entrepreneur has no HR experience, they may find that the associated tasks are exceptionally time-consuming and cumbersome. That may cause them to sacrifice devoting time to what they know best.

Outsourced specialists can also confirm which federal requirements come into effect once a small business has at least 50 workers. That advantage ensures that small-business owners don’t unintentionally overlook labor law stipulations.

The HR strategy at a small business may emphasize creating and maintaining a strong culture. It’s often easier to shape and influence a company’s values when 10 people work at it instead of 1,000. The behaviors of one employee cause a proportionally larger impact on a smaller operation than a larger enterprise.

Similarly, a small-business HR strategy may feature a robust top-down approach. If a company only has five employees, it’s highly likely that workers regularly interact with the leadership. However, at a 50,000-person enterprise, many employees won’t have such engagements.

Exceptions Exist

Creating and following HR strategies can be challenging, especially as a company evolves. However, as long as professionals aim to support organizational goals, they’re starting with a strong foundation.

People should also keep in mind that exceptions to the examples provided in the sections above are always possible. For example, although large businesses typically have the most resources for investing in employees, small businesses can do the same.

They may not provide expansive campuses full of worker perks like Google does, but HR representatives play vital roles in demonstrating that employees matter. Worker appreciation should factor into all HR strategies, whether the company has four employees from one town or 40,000 people clocking in from all over the globe.