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Human Resource Planning

^ Brian J. Smith, John W. Boroski, and George E. Davis -

INTRODUCTION Human Resource (HR) planning is the formal process of linking business strategy with human resource practices. Approaches to human resource planning can be arrayed along a continuum ranging from an "add-on" to business strategy to a separate planning process (Figure 1). At one end of the continuum, HR planning is little more than a postscript to a business planning process. After engaging in an extensive business planning process in which business product, market, and technological directions are defined, questions about HR practices are raised. These questions deal with the structure, competencies, accountabilities, organization, and leadership required to make the strategy work. At this end of the continuum, HR issues are an afterthought to business strategy. They receive relatively little attention and become an appendage to business planning. In the extreme, line managers consider the HR questions as an afterthought to "real" planning efforts. At the other end of the continuum, HR planning is a distinct and separate planning process. The HR department not only initiates the effort for HR planning, but executes and administers the plan. In this case the HR plan is more a process for shaping priorities for the HR function than for the business. In extreme cases, HR plans are created with little or no awareness or input by line managers. While the outcome may be an elegant document, these isolated HR plans add little value to the business because they are separate from the business planning process. The real challenge of HR planning is to integrate business strategy and HR practices. In these initiatives, HR planning is an integral part of a business planning process. HR planning is engaged in by HR professionals working with line managers to ensure that the HR practices which can accomplish business strategy are identified. The outcomes of integrated HR plans are architectures or frameworks for how HR practices can be blended into business decisions to ensure results.
Human Resource Management, Spring/Summer 1992, Vol. 31, Numbers 1 & 2 Pp. 81-93 1993 by John Vy^iley & Sons, Inc. CCC 0090-4848/93/010081-13

AFTERTHOUGHT

INTEGRATION

ISOLATED

Focus on business planning with HR practices considered as an afterthought Line managers own the HR discussions with tangential involvement of HR professionals

Focus is on i synthesis of business and HR planning

Focus is on HR practices and how HR function can add value to the business HR professionals work on the plan and present it to lire managers

Line managers and HR professionals work as partners to ensure that an integrated HR planning process occurs Outcome is a plan which highlights HR practices which are priorities to accomplish business results

Outcome is a summary of HR practices required to accomplish business plans

Outcome is an agenda for the HR function including priority HR practices

Figure 1. Approaches to merging strategic and HR planning.

Obviously, the continuum in Figure 1 is an overstatement which highlights an integrated approach to HR planning; it calls for more models of and approaches to integrated HR planning. In this section, issues and processes necessary for doing integrated HR planning are reviewed. The following series of questions needs to be addressed to develop integrated HR plans:
Who should be involved in HR planning processes, and how can they be encouraged to participate? What are the steps or processes for integrated HR planning? What are the key concepts or integrating frameworks for accomplishing integrated HR planning? What are the desired outcomes of an integrated HR planning process? What are the pitfalls and challenges of accomplishing integrated HR planning?

Two case studies, Colgate Palmolive and Eastman Kodak, offer similar frameworks, but with different applications of those frameworks to integrated HR planning.
COLGATE-PALMOLIVE COMPANY Presented by Brian /. Smith Introduction

Colgate-Palmolive Company believes that unleashing the power of Colgate people represents the best source of sustainable competitive advantage, and that "Colgate people make a world of difference." In 1991, Global Human Resources undertook the developmer\t of a Global Human Resources Strategy which would help achieve Colgate's
vision of "becoming the best truly global consumer products company." The

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decision to begin work on an HR Strategy at that time was based on two key considerations:
The Company was experiencing continued success, in large part due to: the development and implementation of the global equity strategies, the alignment of technology with these strategies, a global manufacturing strategy supported with significant capital investment, the company s financial capability to fund investments in new products and strategic acquisitions, and the effective execution of business plans by general managers around the Colgate world. Colgate's commitment to meet the expressed needs of Colgate people for a broader array of HR programs, specifically more comprehensive career planning and development opportunities.

Process

As one of its first actions, the Global HR Team invited the participation of key senior managers representing all aspects of Colgate operations worldwide. These "line partners" provided invaluable perspective and insight as to the needs of the organization and the role of Human Resources in the achievement of business goals. The newly formed Global HR Strategy Team then continued to seek "customer insight" by interviewing many more Colgate People on an ongoing basis to solicit their views on the direction and scope of the emerging HR Strategy. In October, 1991, the Global Human Resources Strategy was formally presented to the Board of Directors and approved by top management. Getting Started: Sources of Competitive Advantage Colgate realized that much more must be achieved if its long-term goals were to be achieved. The Company is committed to continuously improving these sources of sustainable competitive advantage. The HR Strategy Team organized them into three general areas:
Geographic Excellence General Management 160 Countries Emerging Economies Pan-Europe Category Excellence Global Equities Category Strategies Strategic Acquisitions Global Bundles

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Functional Excellence Product Innovation Marketing Excellence Manufacturing Effectiveness Financial Strength Organizational Excellence:

To align these sources of competitive advance to our business goals and to strive for the involvement and commitment of all Colgate people, we developed the concept of building organizational excellence which is defined as the continuous alignment of Colgate people, organization structure, and business processes with our vision, values, strategies. It is the concept which ties together the areas of geographic, category, and functional excellence.
Human Resources Strategic Architecture:

Our human resources strategy was to build business partnerships to generate, reinforce, and sustain organizational excellence through the structure of a strategic architecture which essentially is a picture of the strategy. Strategic architectures were first used in developing Colgate's global business strategies. They illustrate how the different parts of a strategy are linked. A strategic architecture was very helpful to the Global HR Team in organizing the many programs and initiatives of the HR strategy. We could now organize our work into three levels:
(1) Generating Organizational Excellence Programs and processes which help select and develop Colgate people (2) Reinforcing Organizational Excellence Programs and processes which help focus and align Colgate people (3) Sustaining Organizational Excellence Programs and processes which help support our commitment to continuous improvement

Our strategic architecture was completed by including our HR Core Competencies. These are the knowledge, skills, and behaviors required of Colgate's human resources people: Functional HR excellence Knowledge of the business Change agent The strategic architecture illustrates how the development of Colgate people and the continuous improvement of Colgate business processes (such as company policies and practices) work together to help Colgate "become the best." The following are the strategic initiatives included in each of the three levels of building organizational excellence.

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(1) Generating Organizational Excellence: Best Talentthe processes which provide organizational access to the global diversity of talent for existing and future needs through external sourcing and partnership with internal career planning"best talent" includes the work of attracting, assessing, selecting, and retaining Colgate people. Education and Trainingthe process through which Colgate people continuously expand their capacity to perform, which is driven by the needs of the business. (2) Reinforcing Organizational Excellence: Performance Managementaligning individual and team performance objectives with business goals and customer requirements, evaluating results achieved, coaching for continuous improvement. Team Rewards and Recognitionthe process (through many vehicles) of better balancing the importance of global teamwork with the recognition of individual excellenceteam rewards and recognition include team incentives such as teampower, gainsharing in manufacturing facilities, global stock ownership throughout the entire Colgate world, as well as the Chairman's, "You can make a difference" program. (3) Sustaining Organizational Excellence: Global Competenciesthe knowledge, skills, and behaviors defined as critical to business success at key levels in the organization which ensure unity of vision and performance exceUence. Global competencies represent the centerpiece of HR's business partnership with management. Career Tracks and Planningthe planned sequences of career assignments driven by business requirements (tracks) and employee needs (planning) which develop the necessary competencies for organizational excellence and employee development. Global Cultural DiversityPursuing diversity is the business process through which we recognize all Colgate people as the source of our global strength. Being culturally diverse contributes to consumer recognition of Colgate as the preferred employer and market choice. Employee Insight Surveysthe continual collection and analysis of expressed ideas and expectations of Colgate people globally and the evaluation of the success of our strategic change efforts Employee insight surveys are important tools for continuous improvement and ensuring that Colgate is the employer of choice. Global Communicationsconveying our vision, values, strategies, and practices to all Colgate people, inviting their direct involvement and securing their commitmentThrough this our people know and care more about our business and consumers.

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(HR plays a supportive role in this global communications strategy.) Organization Designthe process for continuously aligningColgate organizational structures with our vision, values, and strategies. Global Human Resources Business Plans Any strategy, however, is nothing until it is implemented. To achieve the initiatives of our HR Strategy, we needed to prioritize customer needs and carefully plan resource requirements. This resulted in translating the Strategy into annual HR Business Plans. Beginning with the 1992 plan, these HR Business Plans will be reviewed by line customers and senior management. They are our calendar for implementation and are a key measure for evaluating performance against plan. A Global HR Business Plan will be published annually. Continuous Improvement Global Human Resources is committed to becoming better in all we do. We believe HR plays a special role to help all Colgate People continuously improve. We work with management to develop training programs, career planning, performance coaching, communications, and reward systems. In early 1992, the Continuous Improvement Group will join the Global HR Team organizationally to better align the many common objectives both groups share. This new partnership will work to ensure that all Colgate people have the opportunity for development, empowerment, and continuous improvement. EASTMAN KODAK
Presented by John W. Boroski and George E. Davis

The driving concept of HR Planning at Eastman Kodak is organizational capability. We had been developing this concept for some time. Our intent was to develop a process that both facilitated and accelerated the innovation of an HR strategy integrated with the overall business strategy. We had been involved in HR planning for a number of years, primarily within the manufacturing organization and some business units of Kodak. We wanted, however, to move the process to the broader organization level of the Company, framing it around the concept of

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organizational capability. In 1990, a great opportunity arose to achieve this goal. The management team, led by the Company's CEO, had been working to define its strategic intent for the imaging business (about $11 billion in revenue). The HR planning framework which we were developing was presented to this management team as a possible way of translating strategic intent into employee action. The management team accepted this proposal. Overall HR Planning Process Our overall purpose was to provide to the company an integrated human resource strategy and implementation plan which supported the business' strategic intent through an HR planning process. To do so required a four step process: Step 1: Define Overall Organization CapabilityIdentify those organizational capabilities required for implementation of the business strategy, i.e., in this case the Imaging Organization s strategic intent. Organization capability represents what the organization must be able to do to be successful in its business. For example, in a rapidly changing imaging market, we had to have the capability of rapid cycle time, i.e., getting products to market faster. Cycle time acceleration became an organization capability. In a general sense, "organizational capability" is the organization s capacity to act and change in pursuit of sustainable competitive advantage. Organizational capability enables execution of business strategy through the strategic management of human resources and organization processes. This generic statement defines the conceptual framework we are using. We believe organizational capability has four dimensions: (1) leadership, (2) shared mindset, (3) competencies, and (4) infrastructure and management processes. At the simplest level, organizational capability represents the capabilities we must have to accomplish our strategic intent. Using a quantitative model (which appeals to our engineers), we have identified four elements of organization capability: OC = f (L *SM*C*I&MP) Where, OC = organizational capability L = leadership (what leaders do) SM = shared mindset (shared beliefs and values) C = competencies (knowledge, skills, and abilities of individuals and organization) I&MP = infrastructure and management process (governance of the organizationtechnical and operational systems) These four factors are interrelated and interactive, and it is necessary to address all of them. Once we have identified the organization ca-

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pabilities critical to the success of the business strategy, we then assess for each capability the dimensions of leadership, shared mindset, competencies and infrastructure. The above equation communicates that we pay attention to all four dimensions of organizational capability. The importance of each dimension varies by organization capability. In this regard, organizational capabilities have become critical success factors for the business. Viewing them through this framework, however, helped us to see that a capability had implications for a number of processes within the organization. For example, if rapid cycle time was a key organizational capability, it had implications for mindset, leadership, competence, and infrastructure. In our imaging business, we worked with line managers to identify those organization capabilities which are critical for us to be competitive. These capabilities represent what the organization had to be able to do in order to be competitive in this rapidly changing business. Nine were identified as follows:
accountability: hold individuals, teams, and businesses accountable for their work action orientation: reduce cycle time for all imaging activities continuous learning: improve constantly how we do work and learn new ideas from anywhere customer focus: approach everything from the point of view of the customer (external and internal) diversity: value differences and encourage new ways of working and acting with a diverse workforce empowerment: make decisions at the appropriate levels in the organization by employees who have authority, accountability and competence globalization: examine product lines, suppliers, and customers in a global, not domestic, context integration: recognize how the pieces of the organization fit together as a whole leadership: ensure that superior performers are in key positions Through extensive discussions with line managers, our belief grew that these nine capabilities were critical to our success. Step 2: Define a Set of HR Practices for Each CapabilityAfter identifying

the capabilities, we tried to identify which HR practices could be used to accomplish the capabilities. We derived seven clusters of HR practices: staffing/selection, development/training, appraisal/feedback, rewards/ recognition, communications, organization/work systems, and environment. Figure 2 shows the framework we used. This framework displays the critical organization capabilities and corresponding HR practices. It also reinforces the critical linkage between organizational capability and HR practices. The process used to complete this matrix is important. We put together a team of senior line managers and HR professionals who after much debate and discussion identified the appropriate HR practices for

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the matrix. The job of the team members was to specify HR practices and programs related to each capability. At first, this seemed like an easy job, but over time, the line managers realized that it was not as easy as first conceived. It required excellence in the various HR practice areas and also the ability to integrate and consolidate HR practices across capabilities. For example, an HR practice which might encourage accountability may not encourage continuous learning. We had to reconcile and rationalize these different HR practices into the priority HR initiatives. Step 3: Integrate across CapabilitiesIntegrating HR practices across capabilities meant that we had to eliminate redundancies, establish priorities, and develop timelines. We also had to identify specific HR deliverables. Again, our line and HR team was responsible for this integration and worked to prioritize the HR initiatives based on criteria such as:
impact: the extent to which the HR practice will impact multiple capabilities, feasibility: the extent to which the HR practice is feasibleit can be delivered, synergy: the extent to which the HR practice is consistent with management belief and practice, customer linkage: the extent to which the HR practice will tie to customers, cost/value: the extent to which the HR practice is worthwhile based on a cost/benefit analysis, risks: the extent to which the HR practice can be done without undue risk, measurability: the extent to which the HR practice can be measured, resources required: the extent to which the HR practice can be implemented with available resources.

By working with this criteria, we were able to prioritize and integrate the HR practices which would be the most effective in achieving the capabilities we identified. Step 4: Produce Products and Implementation PlansIn this step our action plans were designed to accomplish the HR practices and ensure the required organization capabilities. Specific deliverables, timelines, roles, and responsibilities were identified. We defined an overall integrated implementation strategy and also defined metrics to determine effectiveness. These four steps were neither as neat nor as clearly defined as they may seem in retrospect; the steps overlapped. For example an issue in step four may have been addressed also in step one. To some extent we practiced parallel processing more than sequential processing. Human Resource Role The Eastman Kodak Company has in effect a model for quality leadership which is based on an ASSESS/PL AN/DO/VERIFY approach. It

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PLAN

Improvements to organization capability through integrated HB practices and systems ASSESS Current organization capability Competitors' capabilities (I.e. competitive position) Implement HR strategy to improve organizational capability

VERIFY Measure progress of HR strategy Measure effectiveness of HR practlCfs Measure organizational outcomes

Figure 3. Strategic role of HR at Eastman Kodak.

was the human resource role to create the overall HR planning process and to ensure a quality approach. The HR planning process was integrated with the Company's Assess/Plan/Do/Verify quality process (see Figure 3). Linking the HR planning process to the quality process gave it more credibility and helped HR professionals become active partners in making HR planning a reality throughout Kodak. Providing HR professionals with training in HR planning also added to the credibility of the process. These training programs were action oriented; participants in the training were expected to immediately apply the HR planning concepts to the business they supported. Line managers were also invited to participate in the training program, so they could learn about the processes used in HR planning right alongside our HR professionals. A critical role of HR professionals was helping line managers see the value of the HR planning process. Line managers were encouraged to see that the organizational capability focus provided a useful framework for understanding, assessing, and managing the human and organizational resources of the enterprise. The process facilitated a systematic and integrated view enabling us to leverage the power and effectiveness of HR practices and systems. The process became a basis for competitive assessment of how Kodak performs organizationally as compared to how our competitors perform. Finally, the process provided a framework and vocabulary which enabled business leaders to take more ownership of the human and organizational dimensions of the business. Using this rationale, we have been able to encourage line managers to dedicate their time to the HR Planning process. Summary: Human Resource Planning The Colgate Palmolive and Eastman Kodak case studies revolve around similar frameworks and processes. They both begin with the

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logic that an organization's competitive position involves not only strategic, financial, and technological capabilities, but also involves organization capability. This logic suggests that choices concerning how a business is organized become critical for long term competitiveness. The HR Planning process is designed to ensure that an organization has the capabilities necessary to be competitive over time. These capabilities must fit with the strategic intent and customer requirements of the business. As these organization capabilities are identified, decisions can be made to invest in HR practices which build capability. This discussion began with five questions central to HR planning. The two case studies offer some insights on each of these questions: Who should be involved in HR planning processes, and how can they be encouraged to participate? In both cases, a key to their success was involvement from line managers. A team with line managers and HR professionals became the guiding process for the effort. Line managers participated because they were convinced that the HR planning process would help improve business competitiveness over time. In both cases, the steps to HR planning were somewhat similar: (1) Develop a conceptual framework that lays out the ideas (2) Define the strategic intent of the business with a focus on customers (3) Identify the critical capabilities of the organization to be competitive (4) Generate HR practices which can be used to accomplish organizational capabilities (5) Prepare action plans which implement and accomplish the HR plan What are the key concepts or integrating frameworks for In both cases, the central concept to HR planning was organizational capability, or the process of doing

What are the steps or processes for integrated HR planning?

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accomplishing integrated HR planning? What are the desired outcomes of an integrated HR planning process? What are the pitfalls and challenges of accomplishing integrated HR planning?

work in ways that add value to the customer and help the organization manage change. In both cases, the outcomes of HR planning are centered around business competitiveness through more effective allocation of resources and prioritization of HR initiatives. In both cases, the importance of involving line managers was highlighted, and the danger of doing HR planning in a vacuum was emphasized. In addition, both cases highlighted the importance of having HR professionals acquire new competencies to accomplish the changed role.

As HR planning processes become more integrated with business processes, the HR role may change from backroom to partnership status. Brian J. Smith is Director, Global Human Resource Strategy at ColgatePalmolive Company. In this role, he has worked with senior management and the global HR leadership to build organizational excellence. Mr. Smith joined Colgate in 1983 and has held positions of increasing responsibility in Corporate Headquarters and the Corporate Technology Group. John W. Boroski is Director, Human Resource Functional Excellence for Eastman Kodak Company's Corporate Human Resources. His responsibilities include providing corporate leadership in developing and implementing strategies, processes, and programs which enhance the capability of the company's human resource community. Mr. Boroski was educated at Georgetown University, the University of Rochester, and the University of Michigan with studies in history, philosophy, business administration, organizational behavior, and human resource management. George E. Davis is Director, Corporate Human Resource Strategy and Executive Resources for Eastman Kodak Company. He is responsible for the development and integration of major HR strategic programs supporting the company's strategic intent and for the development, succession planning, and compensation of the senior executives in Eastman Kodak. Mr. Davis was graduated from Boston College with a Bachelor of Science degree from the School of Management. He has also completed the Advanced Management Program at the Harvard University Business School.

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