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New product development for a startup, expansion into new regions for new capabilities and customers, a steady uptick in sales revenue over a decade plus in business.
These are all exciting things for startups, midstream companies, or the maturing outfit with a track record. Companies are willing to spend heavily on new product development, a new manufacturing facility, or perks to reward sales teams and build customer relationships (playoff tickets in box seats, anyone? How about an all-expense to Las Vegas?).
Yet, few companies are willing to invest in what will ultimately make them successful in the short, medium, and long term: a people strategy.
It might not be exciting, but a solid strategy around acquiring and keeping top talent is perhaps the most overlooked, single most critical driver of success. No matter where you are in the lifecycle of your company, no matter the industry, failing to design an intentional approach to hiring, structuring, and evolving your talent pool can quietly sabotage growth.
You might be surprised at how few companies have a people strategy.
Research shows that the majority of companies don’t have a clear or documented one. According to a 2023 McKinsey & Company report, only 37% of organizations say their talent management aligns with their overall business strategy. And fewer than 25% have an actual people strategy roadmap that’s proactively adjusted as the business evolves.
If this was a customer satisfaction percentage, it would be all hands on deck to fix such an egregiously low number. To call this an HR issue is to miss the strategic point: this is a leadership failure for the organization at the deepest root, an issue that will affect operational resilience, scalability, culture, and profitability.
That most companies can’t see this problem is for lack of meaningful metrics around the concept of failure itself. What we don’t understand or lack we can’t or don’t try to measure.
Let’s call it what it is: A failure. And most companies are bottom of the class.
So what exactly is a people strategy?
Simply put, a people strategy is your roadmap for how you will attract, develop, organize, and retain the talent you need to execute your business goals. It integrates recruitment, onboarding, learning and development, performance management, workforce structure, compensation, and culture, all through the lens of what the business needs today and tomorrow and the tomorrow after that.
Your people strategy answers critical questions:
- Do we need full-time employees or fractional executives?
- Can consultants solve short-term problems?
- Should we outsource, automate, or scale up internally?
- How do we retain and upskill our top performers?
- What does our organizational structure need to look like to meet demand and fuel growth?
As you grow and change, your people strategy also evolves. What works for a 10-person startup won’t work for a 150-employee company or a cross-border enterprise.
Why most companies don’t have one
There are several reasons companies lack a real people strategy, none of them good:
- Founder and leadership bias toward sales, product, finance, or their own ‘ability’ through force of will to make ‘anything’ happen — a.k.a. the Steve Jobs myth.
- HR is seen as administrative instead of strategic. Hiring is a cost that needs to be recouped rather than a money-making endeavour in itself.
- Rapid growth outpaces planning, causing reactive, shotgun hiring (i.e. shoot and aim).
- No dedicated talent leadership (or too junior an HR team) who can’t understand what they don’t know.
- Lack of internal alignment on company vision and goals, which could be a lack of any vision at all. Many companies just fly by the seat of their pants.
The result is a hodgepodge of hires, confused org charts, misused resources, and escalating turnover costs. Money falls through the cracks. Companies acquire a new customer to offset the unaccounted for losses, which looks to them like they’ve been doing alright, or the right things, all along. Meanwhile they exist in fight or flight modes without really even realizing it, patching holes in the dike and calling it progress.
The financial implications of all of this are massive.
According to the Society for Human Resource Management (SHRM), the average cost per hire is $4,700, but the total cost of a bad hire can be up to 30% of the employee’s first-year earnings. By some accounts, replacing this person costs between 50% to 200% more.
The cost of bad hires, replacements, poor retention, lost knowledge, and misalignment adds up really fast.
Add to this the cost of acquiring new customers to offset losses from employee turnover, misaligned people strategies, poor customer service, and operational inefficiencies. By some figures finding new customers is five to 25 times more expensive than keeping existing ones. It’s all part of the unfortunate math of not having a real people strategy in place.
Fractional vs. full-time
“Two roads diverged in a wood, and I—
I took the one less traveled by,
And that has made all the difference.”— Robert Frost, The Road Not Taken
You might find that a fractional strategy fits you very well, this still being the less travelled recruitment road by most standards. It may be historically unconventional, but it’s rooted in radical practicality.
Hiring a fractional workforce offers remarkable flexibility, and access to seasoned expertise at a fraction of the cost of a full-time hire. It allows companies to bring in serious executive-level talent that’s hard to find, or specialized professionals to join your team on part-time hours, a defined period or project.
The fractional approach is particularly valuable for startups, scaling businesses, or organizations undergoing critical transformation: budgets are limited but real expertise and agility are still pre-requisites.
The more conventional, well-trod road to take is to hire a full-time workforce. Continuity, deeper organizational integration, and the development of long-term culture are all recognized benefits. Some full-time employees might bring a strong sense of ownership if they’re offered stability and room to grow, which adds positively to consistency, team cohesion, and ongoing development.
Ultimately, many modern businesses are using a hybrid of the two people strategy modes, blending the best of both worlds to build higher performing teams.
Defining your people strategy
Here’s an approach you can use to develop your strategic HR needs:
1. Define the work, not just the roles
Instead of defaulting to a job title, ask: What outcomes are we trying to achieve? What skills and capabilities do we need to get there? Is this ongoing work, a finite project, or an advisory need?
2. Evaluate workforce models
Each model has pros and cons:
- Full-time employees offer long-term continuity and culture embedding but come with higher fixed costs (salaries, benefits, compliance).
- Fractional executives deliver high-level strategic leadership on a part-time basis. Perfect for startups or scale-ups needing expertise without full-time overhead.
- Consultants offer project-based help, ideal for specialized or temporary work.
- Hybrid approaches blend models to maximize flexibility, cost-efficiency, and expertise.
3. Model the cost and ROI
Use workforce planning models to project the true cost of each approach. Compare the ROI based on expected deliverables, impact on growth, and risk reduction.
4. Consider organizational stage
A company’s stage determines which roles are mission-critical and which can be fractional or phased in later.
Your new mantra: Strategy before staffing
Your people strategy is equal to your foundation, how strong or how weak. And you know what they say about castles built on sand.
Whether you’re a tech startup, a scaling manufacturer, or a mature construction firm, or something else altogether, the right people in the right model at the right time will define your trajectory, and your outcomes. If you take the time to build your people strategy now, your business, and the people you do hire, will thank you later.
