2024 People Strategy Guide for Increased Retention

Every organization has a business strategy. Most have an HR strategy.

We have a plan for business growth and a system for managing our employees. We've covered all the bases, right?

That approach isn't exactly people-first. It covers business outcomes and internal processes, but it doesn't do much for the people responsible for making those outcomes.

Bottom line: Your business's success depends on its employees. Your people strategy is everything you do to make your employees feel valued and supported.

What is a people strategy?

A people strategy is a proactive approach to recruiting, onboarding, managing, engaging, and retaining talent within your organization. It's an approach to workforce planning that goes beyond traditional HR functions to address employees' personal and professional needs, improve engagement, and build a stronger corporate culture.

Think of your people strategy as a roadmap for business growth based on your current and future employee needs, plus talent acquisition and retention goals.

Of course, your people strategy should be designed to draw in and keep top talent. But it's also about creating an environment that nurtures existing employees, helps them develop their skills, and encourages continuous improvement.

People strategy vs. HR strategy

Since 'people' are usually the responsibility of Human Resources, it's easy to confuse a people strategy with a human resource strategy. But they're quite different in terms of scope.

While the HR department is primarily concerned with employee logistics (paperwork, payroll, employee benefits, etc.), a people strategy is about the overall employee experience. Think of it as the programs your HR team might roll out to support employees, such as diversity initiatives or rewards and recognition programs.

People strategy vs. business strategy

Employers tend to think of people strategies as being the responsibility of HR leaders. But business and people strategies are related. One cannot work without the other.

A business strategy is a long-term plan to guide the company toward success. It includes goals for growth, customer acquisition and engagement, and market expansion.

Your people strategy underpins this success. The day-to-day activities required to meet monthly, quarterly, and yearly goals depend entirely on employee performance.

In that sense, it answers the logical follow-up question for companies creating business strategies: "How will our team make this happen?"

5 pillars of an effective people strategy

Since every team is different, your people strategy is more of a differentiator than a cookie-cutter list with boxes to check off.

There are, however, five key areas a solid people strategy covers:

Talent acquisition

According to Randstad Enterprise's 2023 Talent Trends Report, 77% of today's C-suite execs and HR leaders across 18 markets say their primary focus is value creation, not cost savings.

Hiring is either about finding employees who embody the company culture you want to create or bringing aboard new team members who amplify the one you have, depending on your company's growth stage.

For growing companies with a less-defined culture, new hires are the ones who shape it. Larger companies usually have certain traits they already emphasize, so hiring someone who fits that mold usually means faster time to productivity and longer retention.

Diversity, equity, and inclusion (DEI)

DEI. Over three-fourths of employees and job seekers say it's a determining factor when evaluating job offers. It's an especially important topic for the younger generations of workers (who, by 2025, will make up almost the entire workforce).

Talent acquisition certainly plays a role in this, but DEI is a whole lot more than making a 'diversity hire' here and there.

It's about:

  • Building a diverse workforce in terms of backgrounds, worldviews, and cultures
  • Creating employee resource groups to support employees with similar interests
  • Offering inclusive employee benefits
  • Allowing flexible working arrangements for certain employees' needs
  • Offering training to nurture a culture of inclusion

Your people strategy includes how you plan to launch your DEI program and what it looks like in practice.

Company culture

Company culture is more than just having a game room and snacks in the office. It's how your employees feel about their work, the team dynamic, and the organization as a whole.

Your people strategy supports employees in the following areas, all of which pertain to culture:

  • Employee well-being: how you plan to support their physical and mental health, work-life balance, financial wellness, etc. (and how they might support each other's).
  • Professional development: creating opportunities for employees to develop new skills and advance their careers, with your company or otherwise.
  • Career paths: helping employees map out a successful future with your organization, including promotion targets and leadership development.
  • Rewards and recognition: motivating people with spot awards on a peer-to-peer and manager-to-employee basis, then recognizing them internally and publicly.
  • Values: connecting the company's purpose with everyday work, such as highlighting employee stories that embody organization values.

Performance management

Every team/department lead plays a role in your people strategy by setting expectations for performance and measuring employee contributions.

The 'performance management' aspect of your people strategy involves:

  • Defining clear roles and job descriptions, as well as the competencies required to be successful
  • Setting measurable goals for each month/quarter/year
  • Providing ongoing feedback (positive or constructive)
  • Opening the dialogue between employees and the leadership team for transparency
  • Rewarding performance with promotions, salary increases, and employee perks

Defining employee success is critical to achieving business goals. This is where your business and people strategies overlap.

Every organization has its own way of measuring and improving employee performance. Some focus on KPIs. Others don't.

Employee lifecycle management

The employee lifecycle consists of seven steps:

  1. Attraction
  2. Recruitment
  3. Employee onboarding
  4. Development
  5. Retention
  6. Separation
  7. Advocacy

It visualizes how your employees engage with the company they're a part of from their first contact until the time they leave. And it defines the employee experience at each step.

Your people strategy can help you decide what's most important at each step — for example, how to make onboarding more efficient or ways to recognize top performers.

Characteristics of a successful people strategy

People strategies aren't top-down. They have to come from a shared understanding between workers and the organization.

Let's take a look at the most important characteristics of a strong people strategy and a few examples of how you might implement them.

Ensures alignment with business objectives

Gallup research finds engaged employees to be 18% more productive, 23$ more profitable, and 81% less likely to have absenteeism problems. When you invest in your best talent and nurture them from within, employees give their best in return.

However you define performance, your biggest priority should be to create a communicative and collaborative environment. From a leadership perspective, this means having open doors and regular feedback sessions. For employees, it means having the acknowledgment and support to do their best work.

For example: To create a positive atmosphere and get team memvers more involved in the company's success, you may implement a peer bonus program so employees can recognize each other's hard work and accomplishments.

Prioritizes employee engagement and performance

Gallup research finds engaged employees to be 18% more productive, 23$ more profitable, and 81% less likely to have absenteeism problems. When you invest in your best talent and nurture them from within, employees give their best in return.

However you define performance, your biggest priority should be to create a communicative and collaborative environment. From a leadership perspective, this means having open doors and regular feedback sessions. For employees, it means having the acknowledgment and support to do their best work.

For example: To create a positive atmosphere and get team memvers more involved in the company's success, you may implement a peer bonus program so employees can recognize each other's hard work and accomplishments.

Creates a supportive and inclusive employee experience

No matter who they are or where they are in their career, employees want to feel supported. Employeres have to promote diversity and inclusion from within.

This means making sure everyone — from interns to executive leadership — feels valued and respected regardless of their background, gender identity, and race. It also means giving employees equal access to perks and benefits, regardless of where they are, which department they work in, or how they want to develop themselves personally and professionally.

For example: You might set up a mentor program, so employees can build relationships with more experienced coworkers and gain valuable skills. You might also offer stipends for remote employees and resource groups to support employees with similar interests.

Develops talent to bridge skills gaps

Leading corporations like Amazon are committing millions to upskilling their employees because it cuts down the costs of hiring and creates a culture of learning and development.

74% of workers say they're willing to learn new skills and re-train to remain employable. And most employees would stay with the same company for a long time if they have development opportunities.

For example: To help your team of software developers learn more advanced technologies or broaden their existing skills, you might offer a learning and development stipend to cover training programs and digital courses. You may also offer tuition reimbursement for employees who want to pursue a Master's degree.

Relies on hard data and employee feedback

There's no one-size-fits-all people strategy. You'll have to tailor yours to your organization's unique culture and structure.

Fortunately, this actually makes things easier. All you have to do is talk to your employees, then make the changes they're looking for.

For example: Your people strategy should include pule surveys, one-on-one meetings, and exit interviews. If you administer your benefits with Compt, you can also track enrollment and engagement data right inside the platform.

Focuses on employee wellness

Employees with better physical, mental, social, and financial well-being are more productive and have higher job satisfaction.

Your people strategy should include programs to support employee wellness — like flexible working hours, mental health resources, and gym reimbursement.

For example: Webflow offers employees a $200/month health and wellness stipend employees use to play golf, join a gym, access mental health apps, and just about anything else you can imagine.

People strategies in action

More than anything, your people strategy is the culmination of how your team works, communicates, and grows together.

Think about it: If you can understand every employee's needs, objectives, and preferred working style — then develop them to their fullest potential — you'll have a successful one that sets your company apart from the rest.

To show you what we mean, here's a look at some of our favorite people strategy examples:

Netflix's 360º performance management strategy

Netflix takes one of the most interesting approaches to performance evaluation and feedback. Rather than use traditional annual or half-year performance reviews, Netflix uses 360-degree feedback cycles.

  • Managers, peers, and subordinates evaluate other employees based on specific behaviors and accomplishments.
  • The employee who gives the feedback signs off on the review, rather than remaining anonymous.
  • Netflix doesn't assign KPIs. The company encourages employees to set their own goals, track their own progress, and make adjustments based on others' feedback.
  • According to insiders, any feedback employees receive during 360 reviews can impact their career with the company.

This approach won't work for every company. But we love this approach because it promotes transparency and accountability.

It encourages team members to take risks and be creative. And, although it's probably a bit uncomfortable to leave feedback so visible, replacing KPIs with tangible feedback helps employees make changes that actually benefit them.

Plus, it solves the problem of feedback being given too late.

Spotify's employee growth mindset

Like Netflix, Spotify wants its customers to take risks and learn from failures. The Spotify Band Manifesto embodies this philosophy, which has become a central element to the company's culture.

Employees hold themselves accountable at Spotify. They each create individual development plans, which outline their career goals and steps to succeed within the company. This serves as the basis for manager-employee conversations.

Echo, Spotify's internal talent marketplace, is how Spotify takes things a step further by helping employees explore different opportunities within the company. Echo uses AI to match current employees with other roles that align with their skills, interests, and career goals.

Zappos's (strange) four-week onboarding strategy

The large online clothing/shoe retailer has quite the interesting take on employee onboarding. Its main goals are to weed out bad fits, keep the most talented hires, and ensure everyone in the company understands the customer experience.

  1. Customer service training. The goal of this first step is to ensure every employee understands customer requirements, so anyone in the company could handle calls if they had to. It also helps them improve their service — for instance, developers going through this training, using the systems and tools they created for the call center, may identify opportunities for improvement. After completing their training, they'd return to their desks and enhance their tools to streamline call center operations.
  2. On-the-job training. In addition to the mandatory support training everyone goes through, newbies go through training programs for their specific roles.
  3. "Graduation" parties. Employees who complete their four-week onboardingreceive a special, company-wide "graduation" party. They're even allowed to pick a theme — like a Hawaiian Luau or Under the Sea.
  4. Pay to quit. Employees who aren't happy with Zappos's culture (or anything else about the company) receive $4,000 to leave. Over the years, only 3% of employees who are offered this incentive actually take it (which, we suppose, is a good sign for the company).

How to set up your own people strategy

So, where do you begin, exactly?

As you can see, even just one part of your people strategy (like performance reviews or the onboarding process) requires plenty of creativity and effort.

Here are the five steps to get you there:

1. Start with a vision, then back it with data.

You probably have some ideas about how you want your people strategy to look. Put those into words and create a vision for what success looks like in the way you manage people.

Then, use data to back up your claims. Start with quantitative data you can access, like your turnover rate and employee net promoter score (eNPS).

Then, use qualitative data from employee benefits surveys, exit interviews, and direct feedback during 1:1 meetings. Also solicit this feedback at the executive level through structured interviews with team leads and execs.

2. Uncover the root cause of these issues and set business goals.

Once you have the data, compile retrospective trends and analyze the results. This will uncover how your employees currently feel about working at your company.

Common examples of problems include:

  • Poor employee engagement
  • Consistently missed KPIs
  • Low morale
  • Low benefits enrollment
  • High turnover rates
  • Dissatisfaction with leadership

From there, set goals to address each of these issues. For example, if you have a high turnover rate, your goal may be to reduce it by 10%.

A people strategy is proactive. To achieve the goals you set, you'll also need to map out the activities required to reach them and how you'll measure success.

3. Involve stakeholders in the process.

Although everyone in your company will be involved in your people strategy in some way, you'll need to bring in key stakeholders for their input.

Larger companies have a people team. This team may include the Director of HR, Head of Recruitment, People Operations Manager, and Chief People Officer.

If you don't have a specific team, you'll need to involve executives, managers, directors, and team leads from each department.

4. Involve your entire workforce.

It's the leadership team's responsibility to execute the strategy companywide. Performance reviews, developmental reviews, career tracks, and individual development plans are all examples of processes you can apply to each team member.

5. Collect regular employee feedback.

You won't know for sure how your people strategy will play out in the workplace until it's in effect.

Regularly collecting feedback will help you identify areas of strength and weakness, get an understanding of how your people strategy is impacting employee motivation, and make adjustments if needed.

Plus, it'll show your employees you value their input.

Compt is the employee stipend software you can use to administer benefits, set up a flexible compensation system, and customize rewards and recognition for your people. It tracks employee engagement over time, so you're always in the loop about how your people strategy is performing. See how Compt fits into a successful people strategy.

Your cart