A Human Resource strategy is a business’s overall plan for managing its human capital to align it with its business activities. The Human Resource strategy sets the direction for all the key areas of HR, including hiring, performance appraisal, development, and compensation. The HR strategy is thus a long-term plan that dictates HR practices throughout the organization.
HR strategy is usually a part of the broader (business) strategy. The overall business strategy is formulated based on the past and the present. It is a result of what the company has been doing in the past and its current internal capabilities. An often used tool to arrive at this strategy is the SWOT analysis.
A HR strategy helps in the deployment and allocation of organizational resources (i.e. money, time, personnel). It shows that HR activities create value when they are aligned with what the organization tries to achieve. When there is alignment between the two, HR will contribute to the performance of the organization.