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Strategic HR Planning

Strategic HR planning is an important component of strategic HR management. It links HR management directly to the strategic plan of your organization. Most mid- to large sized organizations have a strategic plan that guides them in successfully meeting their missions. Organizations routinely complete financial plans to ensure they achieve organizational goals and while workforce plans are not as common, they are just as important. 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. Strategic HR management is defined as:

Integrating human resource management strategies and systems to achieve the overall mission, strategies, and success of the firm while meeting the needs of employees and other stakeholders.
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 Implementing the strategic HR plan Related HR Management Standard: Standard 3.3 All employees have a work plan and performance objectives that identify the tasks/activities and expected results for future performance.

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Introduction to strategic HR planning

The overall purpose of strategic HR planning is to:

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:

Where are we going? How will we develop HR strategies to successfully get there, given the circumstances? What skill sets do we need? Related HR Management Standard: Standard 6.1 The organization has a process for regularly reviewing staffing needs.

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The strategic HR planning process

The strategic HR planning process has four steps:

Assessing the current HR capacity Forecasting HR requirements Gap analysis Developing HR strategies to support organizational strategies

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? What jobs will need to be filled? What skill sets will people need?

When forecasting demands for HR, you must also assess the challenges that you will have in meeting your staffing need based on the external environment. To determine external impacts, you may want to consider some of the following factors:

How does the current economy affect our work and our ability to attract new employees? How do current technological or cultural shifts impact the way we work and the skilled labour we require? What changes are occurring in the Canadian labour market? How is our community changing or expected to change in the near future?

To read more about the changing labour force and why it matters to non-profit employers, go to the Diversity at Work section of the HR Toolkit:

Why diversity at work matters

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:

What new jobs will we need? What new skills will be required? Do our present employees have the required skills?

Are employees currently in positions that use their strengths? Do we have enough managers/supervisors? Are current HR management practices adequate for future needs?

Developing HR strategies to support organizational strategies

There are five HR strategies for meeting your organization's needs in the future:

Restructuring strategies Training and development strategies Recruitment strategies Outsourcing strategies Collaboration strategies

1. Restructuring strategies This strategy includes:

Reducing staff either by termination or attrition Regrouping tasks to create well designed jobs Reorganizing work units to be more efficient

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 This strategy includes:

Providing staff with training to take on new roles 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 This strategy includes:

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 This strategy includes:

Using external individuals or organizations to complete some tasks

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 fulltime 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. Types of collaboration could include:

Working together to influence the types of courses offered by educational institutions Working with other organizations to prepare future leaders by sharing in the development of promising individuals Sharing the costs of training for groups of employees Allowing employees to visit other organizations to gain skills and insight

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. Possible HR planning strategies to meet this organizational strategy are:

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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Documenting the strategic HR plan

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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Implementing the strategic HR plan

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 a redundant step if everyone has been involved all the way along, but it's always good to get final confirmation.

The strategic HR plan needs to be communicated throughout the organization. Your communication should include:

How the plan ties to the organization's overall strategic plan 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 How each individual member of staff can contribute to the plan How staff will be supported through any changes How the organization will be different in the future

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.

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 successful in achieving the desired objectives.

Management planning is the process of assessing an organization's goals and creating a realistic, detailed plan of action for meeting those goals. Much like writing a business plan, a management plan takes into consideration short- and long-term corporate strategies. The basic steps in the management planning process involve creating a road map that outlines each task the company must accomplish to meet its overall objectives. Sponsored Link Project Management Tools itsmp combines ITIL & PMBOK ITIL & PMBOK Toolkit www.itsmp.com

Establish Goals
The first step of the management planning process is to identify specific company goals. This portion of the planning process should include a detailed overview of each goal, including the reason for its selection and the anticipated outcomes of goal-related projects. Where possible, objectives should be described in quantitative or qualitative terms. An example of a goal is to raise profits by 25 percent over a 12-month period.

Identify Resources
Each goal should have financial and human resources projections associated with its completion. For example, a management plan may identify how many sales people it will require and how much it will cost to meet the goal of increasing sales by 25 percent.

Establish Goal-Related Tasks

Each goal should have tasks or projects associated with its achievement. For example, if a goal is to raise profits by 25 percent, a manager will need to outline the tasks required to meet that objective. Examples of tasks might include increasing the sales staff or developing advanced sales training techniques.

Prioritize Goals and Tasks

Prioritizing goals and tasks is about ordering objectives in terms of their importance. The tasks deemed most important will theoretically be approached and completed first. The prioritizing process may also reflect steps necessary in completing a task or achieving a goal. For example, if a goal is to increase sales by 25 percent and an associated task is to increase sales staff, the company will need to complete the steps toward achieving that objective in chronological order.

Create Assignments and Timelines

As the company prioritizes projects, it must establish timelines for completing associated tasks and assign individuals to complete them. This portion of the management planning process

should consider the abilities of staff members and the time necessary to realistically complete assignments. For example, the sales manager in this scenario may be given monthly earning quotas to stay on track for the goal of increasing sales by 25 percent.

Establish Evaluation Methods

A management planning process should include a strategy for evaluating the progress toward goal completion throughout an established time period. One way to do this is through requesting a monthly progress report from department heads.

Identify Alternative Courses of Action

Even the best-laid plans can sometimes be thrown off track by unanticipated events. A management plan should include a contingency plan if certain aspects of the master plan prove to be unattainable. Alternative courses of action can be incorporated into each segment of the planning process, or for the plan in its entirety.

Planning means looking ahead and chalking out future courses of action to be followed. It is a preparatory step. It is a systematic activity which determines when, how and who is going to perform a specific job. Planning is a detailed programme regarding future courses of action. It is rightly said Well plan is half done. Therefore planning takes into consideration available & prospective human and physical resources of the organization so as to get effective coordination, contribution & perfect adjustment. It is the basic management function which includes formulation of one or more detailed plans to achieve optimum balance of needs or demands with the available resources. According to Urwick, Planning is a mental predisposition to do things in orderly way, to think before acting and to act in the light of facts rather than guesses. Planning is deciding best alternative among others to perform different managerial functions in order to achieve predetermined goals. According to Koontz & ODonell, Planning is deciding in advance what to do, how to do and who is to do it. Planning bridges the gap between where we are to, where we want to go. It makes possible things to occur which would not otherwise occur.

Steps in Planning Function

Planning function of management involves following steps:-


Establishment of objectives

a. Planning requires a systematic approach. b. Planning starts with the setting of goals and objectives to be achieved. c. Objectives provide a rationale for undertaking various activities as well as indicate direction of efforts. d. Moreover objectives focus the attention of managers on the end results to be achieved. e. As a matter of fact, objectives provide nucleus to the planning process. Therefore, objectives should be stated in a clear, precise and unambiguous language. Otherwise the activities undertaken are bound to be ineffective. f. As far as possible, objectives should be stated in quantitative terms. For example, Number of men working, wages given, units produced, etc. But such an objective cannot be stated in quantitative terms like performance of quality control manager, effectiveness of personnel manager. g. Such goals should be specified in qualitative terms. h. Hence objectives should be practical, acceptable, workable and achievable.
2. Establishment of Planning Premises

a. Planning premises are the assumptions about the lively shape of events in future. b. They serve as a basis of planning. c. Establishment of planning premises is concerned with determining where one tends to deviate from the actual plans and causes of such deviations. d. It is to find out what obstacles are there in the way of business during the course of operations. e. Establishment of planning premises is concerned to take such steps that avoids these obstacles to a great extent. f. Planning premises may be internal or external. Internal includes capital investment policy, management labour relations, philosophy of management, etc. Whereas external includes socio- economic, political and economical changes. g. Internal premises are controllable whereas external are non- controllable.
3. Choice of alternative course of action

a. When forecast are available and premises are established, a number of alternative course of actions have to be considered. b. For this purpose, each and every alternative will be evaluated by weighing its pros and cons in the light of resources available and requirements of the organization. c. The merits, demerits as well as the consequences of each alternative must be examined before the choice is being made. d. After objective and scientific evaluation, the best alternative is chosen. e. The planners should take help of various quantitative techniques to judge the stability of an alternative.
4. Formulation of derivative plans

a. Derivative plans are the sub plans or secondary plans which help in the achievement of main plan. b. Secondary plans will flow from the basic plan. These are meant to support and expediate the achievement of basic plans. c. These detail plans include policies, procedures, rules, programmes, budgets, schedules, etc. For example, if profit maximization is the main aim of the

enterprise, derivative plans will include sales maximization, production maximization, and cost minimization. d. Derivative plans indicate time schedule and sequence of accomplishing various tasks.
5. Securing Co-operation

a. After the plans have been determined, it is necessary rather advisable to take subordinates or those who have to implement these plans into confidence. b. The purposes behind taking them into confidence are :i. Subordinates may feel motivated since they are involved in decision making process. ii. The organization may be able to get valuable suggestions and improvement in formulation as well as implementation of plans. iii. Also the employees will be more interested in the execution of these plans.
6. Follow up/Appraisal of plans

a. After choosing a particular course of action, it is put into action. b. After the selected plan is implemented, it is important to appraise its effectiveness. c. This is done on the basis of feedback or information received from departments or persons concerned. d. This enables the management to correct deviations or modify the plan. e. This step establishes a link between planning and controlling function. f. The follow up must go side by side the implementation of plans so that in the light of observations made, future plans can be made more realistic.