A Guide To Strategic Human Resource Planning
A Guide To Strategic Human Resource Planning
A Guide To Strategic Human Resource Planning
By Workinfo.com, www.workinfo.com
1. Introduction
A comprehensive Human Resource Strategy plays a vital role in the achievement of an organisation's
overall strategic objectives and visibly illustrates that the human resources function fully understands and
supports the direction in which the organisation is moving. A comprehensive HR Strategy will also support
other specific strategic objectives undertaken by the marketing, financial, operational and technology
departments.
In essence, an HR strategy should aim to capture "the people element" of what an organisation is hoping
to achieve in the medium to long term, ensuring that:-
If, as is sometimes the case, organisation strategies and plans have been developed without any human
resource input, the justification for the HR strategy may be more about teasing out the implicit people
factors which are inherent in the plans, rather than simply summarising their explicit "people" content.
articulates more clearly some of the common themes which lie behind the achievement of other
plans and strategies, which have not been fully identified before; and
identifies fundamental underlying issues which must be addressed by any organisation or
business if its people are to be motivated, committed and operate effectively.
The first of these areas will entail a careful consideration of existing or developing plans and strategies to
identify and draw attention to common themes and implications, which have not been made explicit
previously.
The second area should be about identifying which of these plans and strategies are so fundamental that
there must be clear plans to address them before the organisation can achieve on any of its goals. These
are likely to include:
career development frameworks which look at development within the organisation at equipping
employees with "employability" so that they can cope with increasingly frequent changes in
employer and employment patterns
policies and frameworks to ensure that people development issues are addressed
systematically : competence frameworks, self-managed learning etc.
The HR strategy will need to show that careful planning of the people issues will make it substantially
easier for the organisation to achieve its wider strategic and operational goals.
In addition, the HR strategy can add value is by ensuring that, in all its other plans, the organisation takes
account of and plans for changes in the wider environment, which are likely to have a major impact on the
organisation, such as:
Finding the right opportunity to present a case for developing an HR Strategy is critical to ensuring that
there will be support for the initiative, and that its initial value will be recognised by the organisation.
Giving a strong practical slant to the proposed strategy may help gain acceptance for the idea, such as
focusing on good management practice. It is also important to build "early or quick wins" into any new
strategy.
Other opportunities may present the ideal moment to encourage the development of an HR Strategy:-
a major new internal initiative could present the right opportunity to push for an accompanying HR
strategy, such as a restructuring exercise, a corporate acquisition, joint venture or merger
exercise.
a new externally generated initiative could similarly generate the right climate for a new HR
strategy - e.g. Black economic empowerment initiatives.
In some instances, even negative news may provide the "right moment", for example, recent
industrial action or employee dissatisfaction expressed through a climate survey.
The human resources practitioner should ensure that the HR Strategy is integrated with broader
organisational objectives. Above all, it should ensure that the rest of the organisation accepts the
Strategy. To achieve this objective, practitioners should:-
check that there is real commitment to the strategy at all levels of the organisation;
give regular feedback on the implementation of the plan through employee newsletters,
exhibitions etc;
where possible, build into the strategy quantifiable outcomes which can be easily monitored and
evaluated, so that it is possible to show the effect;
make the strategy part of the induction process - especially for senior managers.
There is no single approach to developing a Human Resources Strategy. The specific approach will vary
from one organisation to another. Even so, an excellent approach towards an HR Strategic Management
System is evident in the model presented below. This approach identifies six specific steps in developing
an HR Strategy:-
The six broad interconnected components of this system consist of three planning steps and three
execution steps.
The top three components represent the need for planning. Organizations must determine their strategic
direction and the outcomes they seek. This is usually accomplished with some form of strategic planning.
Classic strategic planning is a formal, top-down, staff-driven process. When done well, it is workable at a
time when external change occurs at a more measured pace.
However as the pace and magnitude of change increases, the approach to strategic planning changes
substantially:
First, the planning process is more agile; changes in plans are much more frequent and are often
driven by events rather than made on a predetermined time schedule.
Second, the planning process is more proactive. Successful organizations no longer simply
respond to changes in their environment, they proactively shape their environment to maximize
their own effectiveness.
Third, the planning process is no longer exclusively top-down; input into the process comes from
many different organizational levels and segments. This creates more employee ownership of the
plan and capitalises on the fact that often the most valuable business intelligence can come from
employees who are at the bottom of the organizational hierarchy.
Lastly, the strategic planning process less reactive and more driven by line leadership.
Once strategic planning is under way, a process must be undertaken by the organization to design and
align its HRM policies and practices to provide for organizational success. The remaining step in planning
is to determine the quality and quantity of human resources the organization needs for its total force.
The rest of the HR strategic system exists for and is guided by these plans, policies, and practices. These
execution components contain mechanisms that generate the correct skill sets, invest in staff
development and performance, and productively employ them in the organisation. The last component
provides a means to assess and sustain the competence and performance of the organization and the
people in it with regard to outcomes that the organization seeks.
4. Analysis
Using the process model discussed earlier, the specific components of the HR Strategic Plan are
discussed in greater detail below.
This process focuses on aligning human resource policies to support the accomplishment of the
Company's mission, vision, goals and strategies. The business' goals sit at the heart of any HR strategy
and in order to align business and HR you need to answer one key question, "Can your organisation's
internal capability deliver the organisation’s business goals?"
Many organisations cite their people as their primary source of competitive advantage. Successful
companies continuously identify and adopt innovative human resource management policies and
practices to sustain that advantage. More importantly, they structure work and design training,
performance management, pay, and reward policies to help members of the organization succeed in
achieving desired organizational outcomes. In other words, they integrate and align HRM policies and
practices to reinforce employee behaviors that can best realize the leaders' strategic intent. In the most
successful companies, the set of policies and practices that collectively make up a company's HRM
system is the critical management tool for communicating and reinforcing the leaders' strategic intent.
Recommended actions:-
Conduct an external environmental scan and evaluate its impact on the organisation
Identify the organisation's vision, mission and guiding principles
Identify the mission's outcomes and strategic goals
Consult all relevant stakeholders
Evaluate the impact of legislation on the organisation
This stage focuses on the selection, design and alignment of HRM plans, policies and practices. Various
options may be open to the organisation such as drawing on industry best practices.
Emerging HRM policies and practices range from outsourcing certain non-core functions, adopting flexible
work practices (telework, work from home) and the increased use of information technology. Not every
industry trend may be appropriate for a specific organisation. In addition, it is essential that a cost-benefit
analysis of implementing new HRM policies and practices be undertaken. For example, the costs
(monetary and in allocation of resources) of implementing a new job grading system may outweigh the
benefit of such an undertaking. There may be more cost-effective alternatives available to the
organisation at this point in time.
Particular HRM policies and practices may be necessary to support strategic organisational objectives,
such as improving the retention of women in the organisation or promoting diversity, especially the
representation of designated groups amongst senior management.
A good approach in selecting the appropriate HRM policies, procedures and practices is to identify the
appropriate HRM practices which support the organisation's strategic intent as it relates to recruitment,
training, career planning and reward management.
Recommended actions:-
Identify appropriate human resource plans, policies and practices needed to support
organisational objectives
Identify relevant human resource best practices
Conduct an employment systems review
The development of a workforce plan is a critical component of any human resource strategy and one of
the expected outcomes of human resource practitioners activities. Despite this, manpower or workforce
planning, as well as succession planning, has only recently enjoyed a resurgence in popularity. To some
extent this has been prompted by the need to develop employment equity and workplace skills plans and
set numerical employment equity targets. The failure of many organisations to develop and implement
workforce planning is rather indicative of the lack of strategic planning itself.
Workforce planning is a systematic process of identifying the workforce competencies required to meet
the company's strategic goals and for developing the strategies to meet these requirements. It is a
methodical process that provides managers with a framework for making human resource decisions
based on the organization’s mission, strategic plan, budgetary resources, and a set of desired workforce
competencies. Workforce planning is a systematic process that is integrated, methodical, and ongoing. It
identifies the human capital required to meet organisational goals, which consists of determining the
number and skills of the workers required and where and when they will be needed. Finally workforce
planning entails developing the strategies to meet these requirements, which involves identifying actions
that must be taken to attract (and retain) the number and types of workers the organisation needs.
A workforce plan can be as simple or as complex as the organisational requires. Workforce planning can
be conducted for a department, division or for the organisation as a whole. Whatever the level or
approach being adopted, it must nevertheless be integrated with broad-based management strategies.
In addition to workforce planning, ensure that organisational structure and jobs ensure the efficient
delivery of services and effective management of the organisation as a whole.
Recommended actions:-
Determine the appropriate organisational structure to support the strategic objectives
Structure jobs (competencies, tasks and activities) around key activities
Develop a workforce plan designed to support the organisations strategic objectives
Compile workforce profiles, identifying designated groups, an inventory of current workforce
competencies, competencies required in the future and identified gaps in competencies
This process focuses on recruiting, hiring, classifying, training and assigning employees based on the
strategic imperatives of the organisation's workforce plan.
A comprehensive workplace skills plan will identify appropriate training priorities based on the
organisations workforce needs now and in the future. New recruitment practices may need to be adopted
to increase the representation of designated groups, or securing essential skills in the organisation. A
comprehensive "learnership strategy" may assist in developing future workforce needs, identified either in
terms of the organisations workforce plan or required in terms of industry black economic empowerment
charters.
Recommended actions:-
Evaluate recruitment and selection practices in light of the organisation’s strategic objectives
Develop and implement a comprehensive workplace skills plan (with a thorough training needs
analysis)
Implement a learnership strategy
Adopt or clarify occupational levels and category classifications
Development responses will aim to increase business skills, the application of business skills (sometimes
called competencies) and the behavioural elements - all of which contribute to an organisation's effective
performance. In many ways, the Skills Development legislation have required organisations to re-
engineer their developmental methods and practices. New concepts such as lifelong learning and
recognising prior learning should form an integral component of the process of investing in employees.
Clearly, where a workforce planning exercise reveals that there is little projected growth in the workforce
or that promotional or career development opportunities are limited, strategies aimed at employee
retention will be very different from organisations which are experiencing considerable growth and
expansion.
Investment initiatives for the individual, team and organisation are all geared to achieve high levels of
organisational performance. It is important that at an individual level, particularly for senior staff, that they
feel their development needs are agreed and that they are provided with the skills to do their jobs. At a
team level, it defines the individuals' ability to work flexibly with others and align individual and team skills
and activities to business goals - all of which ensures that the organisation is equipped to achieve its
goals.
Reward strategies aim to align the performance of the organisation with the way it rewards its people,
providing the necessary incentives and motivation to staff. Its components can be a combination of base
pay, bonuses, profit sharing, share options, and a range of appropriate benefits, usually based on market
or competitor norms and the organisation's ability to pay.
Recommended actions:-
Finally, few organizations effectively measure how well their different inputs affect performance. In
particular, no measures may be in place for quantifying the contribution people make to organizational
outcomes or, more important, for estimating how changes in policies and practices, systems, or
processes will affect that contribution. Implementing clear quantifiable measures, identifying milestones in
the achievement of specific organisational goals, and using concepts such as a "balanced scorecard" will
articulate the results of the HR Strategic Plan in measurable terms. Regular evaluation of the plan will
also assist in fine-tuning the HR strategic plan itself.
Recommended actions:-
5. Conclusion
While HR strategies must be developed to support the achievement of the organisation's objectives, it is a
two-way process. HR strategies can themselves be critical inputs in determining the strategic initiatives
for the organisation. A fatal error, however, is to develop and implement HR strategies without having
regard for the goals and objectives which the organisation has explicitly or implicitly identified. A common
mistake is the development of workplace skills plans which are not linked to any strategic goals or
objectives or which have no affirmative action components.
Similarly, the isolated identification of affirmative action numerical targets without first conducting a
workforce and succession planning exercise is in most instances, simply meaningless.
References:
The approach adopted in this article is substantially based on the SHRM Model developed by the Naval
Personnel Task Force, US Department of Navy. The material presented here is in the public domain.
A Strategic Human Resource Management System for the 21st Century. Naval Personnel Task Force,
US Department of Navy, September 2000
Developing a Human Resources Strategy A good practice guide. South East Employers, June 1999
The Human Resources Standards Generating Body has developed a specific Unit Standard addressing
the development of a Strategic Human Resource Plan, entitled "Contribute input into the human
resources management strategic plan".
HR Planning
Strategic HR Planning
Even a small organization with as few as 10 staff can develop a strategic plan to guide decisions about the future.
Based on the strategic plan, your organization can develop a strategic HR plan that will allow you to make HR
management decisions now to support the future direction of the organization. Strategic HR planning is also
important from a budgetary point of view so that you can factor the costs of recruitment, training, etc. into your
organization's operating budget.
Source: Herman Schwind, Hari Das and Terry Wagar, Human Resource Management: A Strategic Approach.
In this Section:
Introduction to strategic HR planning
The strategic HR management
planning process
Documenting the strategic HR plan
Standard 3.2
All employees have a work plan and performance objectives that
What is this?
identify the tasks/activities and expected results for future
performance.
Ensure adequate human resources to meet the strategic goals and operational plans of your organization -
the right people with the right skills at the right time
Keep up with social, economic, legislative and technological trends that impact on human resources in your
area and in the sector
Remain flexible so that your organization can manage change if the future is different than anticipated
Strategic HR planning predicts the future HR management needs of the organization after analyzing the
organization's current human resources, the external labour market and the future HR environment that the
organization will be operating in. The analysis of HR management issues external to the organization and developing
scenarios about the future are what distinguishes strategic planning from operational planning. The basic questions
to be answered for strategic planning are:
How will we develop HR strategies to successfully get there, given the circumstances?
Related HR Management Standard:
Standard 6.1
The organization has a process to review staffing needs resulting
What is this?
in a plan to address those needs.
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Assessing current HR capacity
Based on the organization's strategic plan, the first step in the strategic HR planning process is to assess the current
HR capacity of the organization. The knowledge, skills and abilities of your current staff need to be identified. This
can be done by developing a skills inventory for each employee.
The skills inventory should go beyond the skills needed for the particular position. List all skills each employee has
demonstrated. For example, recreational or volunteer activities may involve special skills that could be relevant to the
organization. Education levels and certificates or additional training should also be included.
An employee's performance assessment form can be reviewed to determine if the person is ready and willing to take
on more responsibility and to look at the employee's current development plans.
Forecasting HR requirements
The next step is to forecast HR needs for the future based on the strategic goals of the organization. Realistic
forecasting of human resources involves estimating both demand and supply. Questions to be answered include:
How many staff will be required to achieve the strategic goals of the organization?
Gap analysis
The next step is to determine the gap between where your organization wants to be in the future and where you are
now. The gap analysis includes identifying the number of staff and the skills and abilities required in the future in
comparison to the current situation. You should also look at all your organization's HR management practices to
identify practices that could be improved or new practices needed to support the organization's capacity to move
forward. Questions to be answered include:
There are five HR strategies for meeting your organization's needs in the future:
1. Restructuring strategies
2. Training and development strategies
3. Recruitment strategies
4. Outsourcing strategies
5. Collaboration strategies
1. Restructuring strategies
This strategy includes:
If your assessment indicates that there is an oversupply of skills, there are a variety of options open to assist in the
adjustment. Termination of workers gives immediate results. Generally, there will be costs associated with this
approach depending on your employment agreements. Notice periods are guaranteed in all provinces. Be sure to
review the employment and labour standards in your province or territory to ensure that you are compliant with the
legislation.
Termination packages are governed by case law as well as by employment standards legislation (which only states the
bare minimum to be paid). Consult with a lawyer to determine the best approach to termination packages.
Attrition - not replacing employees when they leave - is another way to reduce staff. The viability of this option
depends on how urgently you need to reduce staff. It will mean that jobs performed in the organization will have to be
reorganized so that essential work of the departing employee is covered. Careful assessment of the reorganized
workloads of remaining employees should include an analysis of whether or not their new workloads will result in
improved outcomes.
It is important to consider current labour market trends (e.g., the looming skills shortage as baby boomers begin to
retire) because there may be longer-term consequences if you let staff go.
Sometimes existing workers may be willing to voluntarily reduce their hours, especially if the situation is temporary.
Job sharing may be another option. The key to success is to ensure that employees are satisfied with the arrangement,
that they confirm agreement to the new arrangement in writing, and that it meets the needs of the employer.
Excellent communication is a prerequisite for success.
Caution must be taken when considering the voluntary reduction of hours by existing staff. A change in working
conditions (e.g. hours worked per week) can be considered "constructive dismissal" - especially in the case of
permanent staff. Ensure that you obtain legal advice and there is full written documentation.
Your analysis may tell you that your organization may have more resources in some areas of the organization than
others. This calls for a redeployment of workers to the area of shortage. The training needs of the transferred workers
needs to be taken into account.
2. Training and development strategies
Providing current staff with development opportunities to prepare them for future jobs in your organization
Training and development needs can be met in a variety of ways. One approach is for the employer to pay for
employees to upgrade their skills. This may involve sending the employee to take courses or certificates or it may be
accomplished through on-the-job training. Many training and development needs can be met through cost effective
techniques. See the HR Toolkit section on Learning, Training and Development for more information.
3. Recruitment strategies
Recruiting new staff with the skill and abilities that your organization will need in the future
Considering all the available options for strategically promoting job openings and encouraging suitable
candidates to apply
For strategic HR planning, each time you recruit you should be looking at the requirements from a strategic
perspective. Perhaps your organization has a need for a new fundraiser right now to plan special events as part of your
fundraising plan. However, if your organization is considering moving from fundraising through special events to
planned giving, your recruitment strategy should be to find someone who can do both to align with the change that
you plan for the future.
4. Outsourcing strategies
Many organizations look outside their own staff pool and contract for certain skills. This is particularly helpful for
accomplishing specific, specialized tasks that don't require ongoing full-time work.
Some organizations outsource HR activities, project work or bookkeeping. For example, payroll may be done by an
external organization rather than a staff person, a short term project may be done using a consultant, or specific
expertise such as legal advice may be purchase from an outside source.
When deciding to outsource to an individual, ensure you are not mistakenly calling an employee a consultant. This is
illegal and can have serious financial implications for your organization. To understand the differences between
employees and self-employed people, visit the Canada Revenue Agency's website.
Each outsourcing decision has implications for meeting the organization's goals and should therefore be carefully
assessed.
5. Collaboration strategies
Finally, the strategic HR planning process may lead to indirect strategies that go beyond your organization. By
collaborating with other organizations you may have better success at dealing with a shortage of certain skills.
Working with other organizations to prepare future leaders by sharing in the development of promising
individuals
ABC Social Services provides support services to families in need. It has reviewed and updated its strategic plan. As
part of the strategic planning process the Board Planning Committee learned that 15% of their social workers are
planning to retire over the next two years and recruitment of social workers has become increasingly competitive.
Outcome of the strategic planning process: One strategy developed by the Board Planning Committee is to make ABC
Social Services a preferred employer among organizations in the area.
Develop a recruitment and retention strategy based on discussions with the social workers. Items to consider
are: flexible work arrangements; contracting with a counselor for the social workers on an as-needed basis (give
them someone to talk to about the stresses of the job); provide professional development opportunities that give
them increased skills for dealing with the issues their clients face.
Tie the pay scale of the social workers to the pay scales of social workers working for the municipality (the
appropriate percentage to be determined. For example, the pay of social workers in the organization may be tied at
90% of the pay at the municipal level).
Provide placements for social work students and show them that ABC Social Service would be an excellent
employer after graduation.
Decide the unique strategies that you will use to position yourself as an employer of choice, based on needs
of your employees and potential candidates.
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Once the strategies for HR in your organization have been developed they should be documented in an HR plan. This
is a brief document that states the key assumptions and the resulting strategies along with who has responsibility for
the strategies and the timelines for implementation.
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Once the HR strategic plan is complete the next step is to implement it:
Agreement with the plan
Ensure that the board chair, executive director and senior managers agree with the strategic HR plan. It may seem
like redundant step if everyone has been involved all the way along, but it's always good to get final confirmation.
Communication
The strategic HR plan needs to be communicated throughout the organization. Your communication should include:
What changes in HR management policies, practices, and activities will be made to support the strategic plan
How any changes in HR management will impact on staff including a timeframe if appropriate
It is impossible to communicate too much (but all too easy to communicate too little), especially when changes
involve people. However, the amount of detail should vary depending upon the audience.
Legislation and mandate
Ensure that the actions you are considering are compliant with existing laws, regulations and the constitution and
bylaws of your organization.
To review laws relating to employment, visit the HR Toolkit section on Employment Legislation and Standards
Organizational needs
Whether you are increasing or reducing the number of employees, there are implications for space and equipment,
and on existing resources such as payroll and benefit plans.
Evaluation
HR plans need to be updated on a regular basis. You will need to establish the information necessary to evaluate the
success of the new plan. Benchmarks need to be selected and measured over time to determine if the plan is s