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Practicing Strategic Human Resources
Overview Background Benefits of HR Strategic Planning Developing a Strategic HR Plan
Assess the Current Situation
Envision the Future
Develop Strategic HR Objectives
Monitor and Evaluate
Additional Resources
This article provides a definition, background, information, resources and suggested reading on how to begin the process of strategic human resources. Topics include the following:
- Benefits to HR to engage in strategic planning.
- Developing a strategic HR plan.
- Assessing the organization's current environment.
- Creating statements of vision, mission and values.
- Implementing, monitoring and evaluating the HR strategic plan.
Strategic human resource management involves a future-oriented process of developing and implementing HR programs that address and solve business problems and directly contribute to major long-term business objectives.
HR management was once largely an administrative function focused on day-to-day responsibilities such as employee recruiting and selection and managing employee benefits. Changing labor market conditions and new business thinking call for HR business strategies that include recruiting and retaining the right people, as well as providing ethical and cultural leadership.
Strategic planning presents great challenges and opportunities for HR professionals. Nearly all HR leaders in the largest global companies are involved in strategic decision-making and participate on the organization's strategy team, and a majority of HR professionals report that strategic planning is part of their function. In contrast, HR professionals in many medium and small organizations are not often involved in organizational or functional strategic planning. Consequently, to achieve long-term strategic HR objectives and to be a key player in the organization's strategic planning process, some HR departments may need to convince senior management of the value and contribution HR can provide.
Benefits of HR Strategic Planning
The closer the alignment between HR and an organization's overall business strategy, the better the company's ability to anticipate and respond to customer needs and to maintain competitive advantage. Rigorous research, planning and development involving workforce culture, behaviors and competencies promote the successful execution of business strategy.
Particular benefits of HR strategic planning include the following:
- Avoiding costly and disruptive surprises that interfere with achieving goals.
- Addressing key issues in a timely manner to avoid crises.
- Promoting employee productivity and overall organizational success.
- Providing a sense of direction to positively affect how work gets done.
- Keeping employees focused on organizational goals.
- Providing a strategic focus to guide training and development initiatives.
- Giving leaders tools to help focus and implement their strategic initiatives.
Developing a Strategic HR Plan
HR's role includes developing a plan of HR initiatives to achieve and promote the behaviors, culture and competencies needed to achieve organizational goals.
Results-oriented goals broadly include the following:
- Correctly assessing staffing and skills needs and keeping training up-to-date.
- Developing and maintaining competitive pay and benefits.
- Managing performance and designing a rewards system that keeps employees motivated.
- Knowing what competitors are doing to recruit and retain talent.
- Providing training, including ethics, which reinforces corporate values.
The strategic planning process begins with four critical questions:
- Where are we now? (Assess the current situation.)
- Where do we want to be? (Envision and articulate a desired future.)
- How do we get there? (Formulate and implement a strategy and strategic objectives.)
- How will we know if we are on track toward our intended destination? (Establish a mechanism to evaluate progress.)
See HR as Strategic Planning Facilitator .
The following sections examine each step in greater detail.
Being a strategic business partner means carrying out HR activities with the long-range goals of the organization in mind. To do this, HR professionals must do the following:
- Understand how the various organizational components interact and recognize the long-term implications of HR decisions. The impact of HR decisions must be thoroughly researched and analyzed before changes are implemented.
- Have a firm grounding in business basics, including finance, marketing, sales, operations and IT. These skills help with budgeting and with maintaining a workforce with the correct mix of skills.
- Develop and exercise analytic skills directed at "the why" as well as "the what." This may mean spending more time on so-called translational work (such as coaching business leaders, planning and implementing HR practices that effectively execute strategy, and helping teams manage change) than on transactional work (such as recruitment, training, human resource information systems and other traditional HR functions).
- Conduct a strengths, weaknesses, opportunities and threats (SWOT) analysis of their organizations. The SWOT approach offers a clearer picture of customers, markets and competitors.
What are the basics of environmental scanning as part of the strategic planning process?
What is SWOT analysis, and how does it apply to an HR department?
How to Make Strategic Choices in Uncertain Conditions
Aligning the HR function to the organization's business strategy
For HR departments, intradepartmental strategic planning can be a good way to start the functional alignment process. However, regardless of whether strategic planning begins in the HR department or in another department, or is managed on an organization wide scale, the actions of the HR department will be integral to the success of the strategic plan. Thus, HR professionals must take care to align the HR function with every aspect of the strategic plan, even if the strategic plan does not explicitly address HR issues. Recent SHRM research reveals that HR professionals foresee significant workplace challenges, including rising health care costs, the retirement of large numbers of Baby Boomers and the increased demand for work/life balance. Retention programs, work/life programs, succession planning, and health, safety and security programs are among the HR efforts that are viewed as key workplace challenges through which HR can strategically contribute to organizations. See Aligning Workforce Strategies with Business Objectives.
The HR alignment process is often driven by workforce composition issues. Although every organization's particular strategic plan is unique, the demographics and other characteristics of the available workforce have a major effect on the way businesses are staffed. In turn, the way organizations are staffed has a significant impact on the execution of the organization's strategy.
HR professionals should monitor and respond accordingly to factors that may affect workforce composition, including the following:
- Age. The age of the existing employees, the age of the available workforce, and the patterns of retirement for older workers and for the entrance of younger workers can significantly affect workforce availability.
- Current economic conditions. Unemployment rates, natural disasters and political changes can also have an impact the availability of workers.
- Globalization. One aspect of globalization that will affect almost all organizations is the increasing diversity of the workforce. Another aspect of globalization is the economic incentive to outsource labor and production activities to wherever such costs are lower. A third, and related, aspect is immigration, both legal and illegal, in the United States and abroad.
Conducting a SWOT analysis
Understanding of the current situation can be enhanced by conducting a SWOT analysis. This analysis includes an internal assessment of the organization's capabilities and limitations as well as an external environmental scan to review its customers, markets and competitors, and to forecast to external opportunities and threats.
What is a S.W.O.T. analysis, and how does it apply to an HR department?
Cultivate Critical Evaluation with a PESTLE Analysis
How To Build On Your Organization's Strengths
Major areas to consider during an external scan include economic, demographic, political, social and technological trends. An analysis of customers, markets and competitors is used to determine how the market is changing, to predict who the future customers will be and to analyze competitors in the marketplace. See Strategic Planning: What are the basics of environmental scanning? and Report: HR Lags in Using Data to Make Decisions .
When conducting a customer/market/competitor analysis, HR professionals should answer the following questions:
- What business are we in?
- What is going on in the world in which we do business?
- What business should we be in?
- What are our resources?
- What are our core competencies?
- Who are our competitors?
- How will we compete?
When the HR strategic planning team has fully evaluated the current situation, it should consider what the ideal future would look like from an organizational perspective.
The question "Where do we want to be?" can be answered and clearly articulated by creating statements of vision, mission and values. A vision statement provides a description of what an organization wants to become or hopes to accomplish in the future. An effective vision statement paints a mental picture of the organization's preferred future that is inspirational, aspirational, compelling and concise. See Human Resources Mission Statement Examples .
A values statement describes what the organization believes in and how it will behave. This statement can serve as the organization's moral compass and should be used to guide decision-making and assess actions taken. See Mission: What Is the Difference Between a Company's Mission, Vision and Values Statements?
Setting strategic objectives is an important part of the strategic planning process. Therefore, these objectives must be aligned with the organization's mission, vision and overall strategy. Strategic objectives will vary from organization to organization.
To identify whether strategic objectives have a solid foundation for success, HR should consider the following questions:
- Have the benefits of obtaining the defined objectives been outlined and communicated?
- Are the strategic objectives relevant to the organization's position in the external market? For example, do they consider competitor positions, organizational size and financial strength?
- Do the strategic objectives recognize the organization's strengths and weaknesses?
- Do employees throughout the company understand how these objectives affect them and how they contribute independently and collectively to the defined objectives?
- Are the strategic objectives realistic and feasible? Unrealistic objectives typically result in disappointment for all involved.
- Have timelines for benchmarking progress and targets for completed objectives been set?
- Will the organization realistically be able to identify the success or lack of success in the accomplishment of strategic objectives in some quantitative fashion?
- Can the strategic objectives be linked back to the organization's overall strategy?
As an example, ABC Company may identify in its strategic planning analysis a need to improve the talent acquisition process. The strategic objective to address this issue is to design selection criteria to ensure best-fit hiring while reducing the time-to-fill positions.
Once a key initiative is identified, the organization should do the following:
- Continuously ensure that the objective and action plan are aligned with the organizational and HR strategy.
- Identify the primary actions required to achieve the objective.
- Set milestones for each action, and plan for contingencies.
- Identify the required resources, including budget and staff.
- Establish success measures.
- Communicate key messages.
Ultimately, a strategic objective is only as good as the overall strategic plan.
At this step of the strategic planning process, the focus is on specifying short-term answers to the question "How do we get there?" Specific, concrete short-term objectives that can be completed within six months to a year should be established to answer this question.
Although many organizations engage in strategic planning, very few of them believe they are highly successful at strategy execution. According to a survey by the American Management Association and the Human Resources Institute, only 3 percent of executives polled said their organizations were very successful at executing corporate strategy, whereas 62 percent stated their organizations were moderately successful. However, the companies that reported relatively high success in strategy execution were more likely to realize favorable revenue growth, market share, profitability and customer satisfaction.
Though every organization has its own strategy execution challenges, this study found that mastering the following areas is essential to successfully implementing strategic plans:
- Clarity of communication.
- Alignment of practices.
- Leadership.
- An adaptive organizational infrastructure.
- Resource management.
The single greatest barrier to executing strategy is the lack of adequate resources, the study found.
The final step should be establishing a mechanism to monitor and evaluate progress toward the achievement of strategic objectives. Most organizations conduct annual or quarterly strategic reviews for this purpose. These reviews do the following:
- Determine whether the organization is on track to achieve key objectives.
- Provide the opportunity to identify and adapt to significant internal or external changes that affect the strategic plan.
- Update annual action priorities.
Some organizations may find that systems or tools such as balanced scorecards, benchmarking and dashboards are helpful for keeping focus and monitoring results.
How can the balanced scorecard be applied to human resources?
How do I determine which HR metrics to measure and report?
9 Tips for Using HR Metrics Strategically
Artificial Intelligence Can Free HR Professionals to Focus on Strategy
Wilkinson, Michael (2011) The Executive Guide to Facilitating Strategy Atlanta, GA: Leadership Strategies Publishing.
Stroble, K. R., Kurtessis, J. N., Cohen, D. J., & Alexander, A. (2015). Defining HR Success: 9 critical competencies for HR professionals. Alexandria, VA: Society for Human Resource Management.
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4 steps to strategic human resource planning
Reading time: about 6 min
4 steps to strategic human resources planning
- Assess current HR capacity
- Forecast HR requirements
- Develop talent strategies
- Review and evaluate
It’s easy to understand the importance of the human resource management planning process—the process by which organizations determine how to properly staff to meet business needs and customer demands. But despite its obvious importance, many organizations do not have a strategic human resource planning process in place, with many HR professionals reporting their departments need to improve strategic alignment.
If you’ve considered developing an HR planning process, you’re in the right place. This article will explain what human resource planning entails and how to document your strategic plan. With this knowledge under your belt, you’ll be filling positions and growing as a company in no time.
Introduction to strategic human resource planning
In order to improve the strategic alignment of staff and other resources, it’s essential to understand how to create a strategic HR planning process. At its most basic level, strategic human resource planning ensures adequate staffing to meet your organization’s operational goals, matching the right people with the right skills at the right time.
It’s important to ask where your organization stands currently and where it is going for your plan to remain flexible. Each company’s plan will look slightly different depending on its current and future needs, but there is a basic structure that you can follow to ensure you’re on the right track.
The strategic human resource planning process begins with an assessment of your current staff, evaluating whether it fits the organization’s needs. After that, you can move on to forecasting future staffing needs based on business goals. From there, you’ll need to align your organization’s strategy with employment planning and implement a plan to not only to hire new employees but also to retain and properly train the new hires —and your current employees—based on business changes.
Read on to understand human resource planning in more detail.
1. Assess current HR capacity
The first step in the human resource planning process is to assess your current staff. Before making any moves to hire new employees for your organization, it’s important to understand the talent you already have at your disposal. Develop a skills inventory for each of your current employees.
You can do this in a number of ways, such as asking employees to self-evaluate with a questionnaire, looking over past performance reviews, or using an approach that combines the two. Use the template below to visualize that data.
2. Forecast HR requirements
Once you have a full inventory of the resources you already have at your disposal, it’s time to begin forecasting future needs. Will your company need to grow its human resources in number? Will you need to stick to your current staff but improve their productivity through efficiency or new skills training? Are there potential employees available in the marketplace?
It is important to assess both your company’s demand for qualified employees and the supply of those employees either within the organization or outside of it. You’ll need to carefully manage that supply and demand.
Demand forecasting
Demand forecasting is the detailed process of determining future human resources needs in terms of quantity—the number of employees needed—and quality—the caliber of talent required to meet the company's current and future needs.
Supply forecasting
Supply forecasting determines the current resources available to meet the demands. With your previous skills inventory, you’ll know which employees in your organization are available to meet your current demand. You’ll also want to look outside of the organization for potential hires that can meet the needs not fulfilled by employees already present in the organization.
Need advice on calculating your staffing needs and developing a staffing plan?
Matching demand and supply
Matching the demand and supply is where the hiring process gets tricky—and where the rest of the human resources management planning process comes into place. You’ll develop a plan to link your organization’s demand for quality staff with the supply available in the market. You can achieve this by training current employees, hiring new employees, or combining the two approaches.
3. Develop talent strategies
Recruitment
In the recruitment phase of the talent development process , you begin the search for applicants that match the skills your company needs. This phase can involve posting on job websites, searching social networks like LinkedIn for qualified potential employees, and encouraging current employees to recommend people they know who might be a good fit.
Once you have connected with a pool of qualified applicants, conduct interviews and skills evaluations to determine the best fit for your organization. If you have properly forecasted supply and demand, you should have no trouble finding the right people for the right roles.
Decide the final candidates for the open positions and extend offers.
Bring clarity to the hiring process to find the best candidates for your company.
Training and development
After hiring your new employees, it's time to bring them on board. Organize training to get them up to speed on your company’s procedures. Encourage them to continue to develop their skills to fit your company’s needs as they change. Find more ideas on how to develop your own employee onboarding process , and then get started with this onboarding timeline template.
Employee remuneration and benefits administration
Keep your current employees and new hires happy by offering competitive salary and benefit packages and by properly rewarding employees who go above and beyond. Retaining good employees will save your company a lot of time and money in the long run.
Performance management
Institute regular performance reviews for all employees. Identify successes and areas of improvement. Keep employees performing well with incentives for good performance.
Employee relations
A strong company culture is integral in attracting top talent. Beyond that, make sure your company is maintaining a safe work environment for all, focusing on employee health, safety, and quality of work life.
4. Review and evaluate
Once your human resource process plan has been in place for a set amount of time, you can evaluate whether the plan has helped the company to achieve its goals in factors like production, profit, employee retention, and employee satisfaction. If everything is running smoothly, continue with the plan, but if there are roadblocks along the way, you can always change up different aspects to better suit your company’s needs.
Why document your strategic HR plan
Now that you know the steps to strategic human resource planning, it's time to adapt those steps to your own organization and determine how to execute.
There are a number of reasons to document your strategic human resources plan, particularly in a visual format like a flowchart. Through documentation, you standardize the process, enabling repeated success. Documentation also allows for better evaluation, so you know what parts of your plan need work. In addition, a properly documented plan allows you to better communicate the plan throughout the organization, including how everyone, from the top down, can contribute to make sure the plan works.
Document every step of the process, from beginning to end, and find room for improvement in your human resources process along the way.
Start creating your own strategic human resource plan with this template.
Lucidchart, a cloud-based intelligent diagramming application, is a core component of Lucid Software's Visual Collaboration Suite. This intuitive, cloud-based solution empowers teams to collaborate in real-time to build flowcharts, mockups, UML diagrams, customer journey maps, and more. Lucidchart propels teams forward to build the future faster. Lucid is proud to serve top businesses around the world, including customers such as Google, GE, and NBC Universal, and 99% of the Fortune 500. Lucid partners with industry leaders, including Google, Atlassian, and Microsoft. Since its founding, Lucid has received numerous awards for its products, business, and workplace culture. For more information, visit lucidchart.com.
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What Is Strategic HR Planning? A Guide for Your Business
Sierra Rogers
- What is strategic HR planning?
- What are the benefits of strategic HR?
- An overview of the strategic HR planning process
Strategic HR planning helps your organization work together to achieve business goals. Learn all about strategic HR below.
Historically, the human resources function has been more administrative than strategic. But today, almost every leading global company’s HR department is involved in future planning and strategic decision-making.
According to SHRM , however, HR professionals in small to midsize organizations are not involved in organizational strategic planning. And even more concerning, Gartner found that only a little over a third of organizations find their HR function to be effective at strategic planning ( full source available to clients ).
If you’re a part of the remaining majority that’s behind the curve, this guide is for you.
In it, we’ll explain what strategic HR is, its long-term benefits, and provide an overview of the process in order to help you, an HR leader, put your organization on a path to sustainable success.
1. What is strategic HR planning?
Gartner defines strategic HR planning like this: “HR leaders plan for business risks and opportunities by prioritizing and allocating resources to HR initiatives.”
When put into action, this includes:
Aligning business and HR strategies
Defining HR priorities relative to critical business initiatives
Adjusting the execution of initiatives as business conditions change
With a traditional human resource management strategy, actions taken by the HR department are often reactive. For example, recruiters will focus on backfilling roles that become open due to turnover, or answering employees’ questions about benefits or compensation as they arise.
Strategic human resource management is more anticipatory. For instance, instead of waiting for questions to be asked or workers to leave their roles, HR professionals may develop a self-service employee knowledge base or start an initiative to improve their employees’ job satisfaction.
Put simply, strategic HR helps plan for the future of the organization, rather than just support the present.
2. What are the benefits of strategic HR?
Businesses that practice strategic HR experience a variety of benefits, including:
Better alignment between HR strategy and business strategy: The number one benefit of strategic HR planning is that the HR department is actively involved in helping achieve business goals. For example, if your business has a goal to improve efficiency, HR will support this by looking for opportunities to automate workflows and analyzing information on employee productivity and attendance .
Well-thought-out hiring initiatives: Workforce planning is an element of strategic HR that anticipates your organization’s hiring needs over the next two to five years. This allows your team to make better decisions about how to effectively use the talent you have, as well as what sort of resources should be allocated to recruiting efforts and when.
More effective training and development programs: Planning training and development initiatives that align with business goals is another important aspect of a strategic HR approach. For instance, if it becomes clear through workforce planning that a handful of senior leaders are set to retire in the next few years, you can invest in a leadership development program in order to prepare current employees with high potential to step into those roles.
Ready to hire a staffing agency for your business needs? Browse our list of companies in the following areas:
Staffing agencies in Atlanta
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Staffing agencies in Minneapolis
3. An overview of the strategic HR planning process
Start by defining organizational goals
It’s best to know where you’re headed before starting the journey, which is why the first step in strategic HR is to define your organization’s most pressing business goals. Whether it be improving customer service or branching out into new markets, work with department heads and C-level leaders to outline your organization’s primary goals over the next one to three years.
Evaluate your current team’s capabilities
The next step of strategic HR planning is to audit your workforce. The purpose of this audit is to gain an sense of the skills and potential of your current employees, including the HR department itself.
HR analytics software can help you collect and analyze information such as the headcount, distribution of skills, development potential, and age demographics of your current employees. Check out the 2021 Capterra Shortlist for an overview of the best HR analytics tools on the market right now.
Forecast future HR needs
Knowing your organization’s future goals and the state of your current workforce, the next step is to brainstorm into the future with your HR team. To keep this brainstorm on track, focus on answering the following questions:
Which high priority skills do we need to acquire over the next few years?
Are there current employees that we can train as a means to acquire new skills?
Should we increase or decrease our headcount? By how much?
Which company-wide HR initiatives would be the most beneficial considering our organization’s goals (e.g. improving employee engagement, establishing an employee well-being program, increasing productivity , capturing employee referrals, etc.)?
Conducting a skills gap analysis will help you answer some of the above questions. Check out " A Better Way To Do a Skills Gap Analysis " for an overview of the process and advice for how to execute each step.
Create a plan of action
Next, it’s time to develop a plan of action based on your forecasted HR needs. The specific steps your team needs to take will depend on how you answered the questions in step three. For example, if you determine that you will need to significantly increase headcount over the next few years, your team should begin to draft a timeline of open positions and target dates for when to fill them.
Is upskilling a part of your plan of action? These resources may help:
Small Businesses Need to Own Upskilling Their Workforce
3 LMS Features That Help with Upskilling Employees
Continuously monitor your strategy’s success
Strategic HR is an ongoing effort, but that doesn’t mean you shouldn’t measure the impact of your actions. The metrics you use to judge your success will vary depending on the focus of your plan; for instance, if your team launched an employee engagement initiative, you can compare absenteeism, voluntary turnover, and productivity metrics to their pre-initiative rates to give you an idea of how effective your initiative was.
Investing in business intelligence or HR analytics software will make tracking these metrics easy. These tools can be used to create custom dashboards that populate with real-time data and build reports that you can share with stakeholders.
Before you go, bookmark these resources
In the world of HR, there’s always more to learn. Lucky for you, we’re always working on new research and resources that help your team stay up to date.
Head to our talent management blog to find more content like this guide. Here are some recent titles that might spark your interest:
3 Effective, Innovative HR Practices You Can Adopt Today
3 Surefire Predictions for the Future of Talent Management
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About the author.
Sierra Rogers is a senior content writer at Capterra, covering human resources, eLearning, and nonprofits with expertise in recruiting and learning and development strategies. With a background in the tech and fashion industries, she has extensive experience keeping her finger on the pulse of the latest trends and reporting on how they impact our world. Sierra enjoys cooking and dining out, collecting vintage designer goods, and spending time with her pets at home in Austin, Texas.
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Home › Strategic Human Resources Management › What is Strategic Human Resource Management?
What is Strategic Human Resource Management?
TABLE OF CONTENTS
Strategic human resource management is a process that helps the human resources department maximize the potential of its workforce through strategic planning, talent management, leadership development, organizational design, and performance management.
In the past, strategic HR management was an administrative function. Today, HR managers play a critical role in ensuring that the organization has the right people that help improve business performance and ensure that it delivers on its mission.
It means that HR professionals need to understand its goals and objectives. How they can best help the organization achieve those goals, and what actions will allow them to do so. This article will help you better understand what strategic human resource management is and how a smart plan can bring tremendous value to the organization.
If you’re interested in learning more via video, then watch below. Otherwise, skip ahead.
What are Strategic HR Management Goals?
Strategic human resource management involves developing and implementing strategies for attracting, retaining, motivating, and managing talented individuals who contribute to the organization’s success. HRM also includes policies and practices designed to ensure fairness in employment relations.
Strategic human resource management aims to achieve a competitive advantage by creating value for customers, shareholders, employees, and other stakeholders. The term “strategy” refers to the organization’s overall plan of action to create value. It is not just one thing; it is a combination of many things, including:
- Actions are taken by the organization to meet customer needs
- Policies and procedures used to manage the organization
- Processes used to produce goods or services
- Marketing activities used to sell products and services
- Financial decisions made to fund operations
- Organizational structure
- The technology used to support business processes
- People-related issues such as recruitment, selection, training, compensation, benefits, and performance management
- Legal requirements and regulations affecting the organization
How Can Businesses Benefit from HR Strategic Planning?
Businesses benefit from strategic human resources management because it allows human resource departments to make better decisions. For example, companies can develop plans to improve productivity, reduce costs, increase profits, and enhance employee satisfaction. The sales and HR departments play a role in determining whether the company should expand into new markets, acquire another company, or merge with another business.
If you want to attract more customers, understand what your target market wants and how you can provide it. It would be best if you also decided which marketing methods would work best.
To retain current customers, you must first find out why they buy from you instead of competitors. Then you must figure out ways to keep them satisfied. You may even wish to consider offering discounts or gifts to reward loyal customers.
You must also think about motivating your employees to perform well and stay productive. If you want to hire more qualified candidates, you must first understand the qualities you are looking for in potential hires. You must also decide if you’re going to use job descriptions or conduct interviews when hiring.
Once you have determined your priorities, you can begin to implement changes to improve results.
Strategic Human Resources Management Benefits
Strategic HR involves careful consideration and analysis. Due to that, here are specific benefits of human resource strategic planning for businesses:
- Identify areas of weakness and strengths
- Develop strategies to address these weaknesses and strengths
- Establish sub-goals and objectives to measure progress toward the end goal
- Make sure there is alignment between business strategy and human resources strategy
- Ensure that all aspects of the organization revolve around the same set of goals and objectives
- Create a culture of continuous improvement
- Evaluate the effectiveness of programs and policies
- Increased job satisfaction
- Employee retention
Check our certified HR courses if you want to learn more about developing and implementing a strategic HR management plan. Master HR management and how to get the best out of your employees.
7 Steps to Creating a Strategic HR Plan
One of the main functions of HR is to provide an effective organization’s workforce management. It includes operational and strategic management and developing a plan that helps employees evolve. To do this, you need to start by determining the purpose of your human resource strategy.
Next, you need to look at the organizational structure of your company. How many levels are there? Do you have a different human resources department within each class? Are some divisions larger than others?
Some of the target outcomes for human resources planning include the following:
- Increase profitability through a strategic HR planning process
- Improve customer service
- Enhance employee morale and motivation
- Provide training and development opportunities
- Reduce turnover rates
- Maintain high-quality standards
Once you have these outcomes in mind, you can follow the following steps in developing a strategic HR department.
1. Define Goals
Defining goals helps you focus on a more strategic human resource management strategy. It gives you direction and provides a framework for measuring success. A goal is an objective you hope to achieve within a specific time frame. It’s something you want to accomplish. A plan is usually quantifiable. For example, you might say, “I want to increase my sales revenue by 20% to achieve a competitive advantage.”
Goals break down into sub-goals. The intermediate goals help you reach the ultimate goal. Additionally, they provide milestones in the strategic HR planning process. For example, if your ultimate goal is to increase sales revenue by 20%, then your intermediate goals can be:
- Achieve a 5% increase in sales revenue over last year.
- Achieve a 10% increase in sales revenue from January to June.
- Achieve a 15% increase in sales revenue during July.
It’s also essential to develop a SWOT analysis when defining your strategic HRM goals. The SWOT analysis helps identify any potential threats or obstacles that may hinder organizational success.
When conducting a SWOT analysis of your HR strategy, consider the following questions:
- What are your strengths?
- What are your weaknesses?
- Where are your opportunities?
- What are your threats?
Answering these questions will help you define business goals and improve business performance.
2. Determine Objectives
Objectives are measurable actions you take to meet your goals. They are how you achieve your goals.
Your objectives should be realistic. They should not be too ambitious. If they are too complicated, you may fail. You also don’t want them to be so easy that you will never succeed.
You should have a working strategic human resource management process to define specific human resource objectives for your business. Some examples include:
- Increase the number of new hires by 50%.
- Increase the average length of employment by three months.
- Reduce the percentage of employees who leave their jobs by 25%.
- Eliminate the use of temporary workers.
- Increase the number and proportion of women in management positions.
- Increase the proportion of senior managers with MBA degrees.
Your HR objectives should align with your overall company objectives. For example, if your company wants to increase its market share, setting up similar goals makes sense. Additionally, you should align all your HR objectives to your company’s financial objectives.
Keep in mind that the more tangible your objectives are, the easier it will be to measure progress.
3. Create Strategies
Strategic human resource management is all about the strategies you intend to use to achieve your objectives. They are the methods you’ll use to get there. There are many different strategies available. However, there are three main types.
- Change Strategy – This involves changing the current status quo or making changes that are already underway.
- Reinforcement Strategy – Involves reinforcing existing practices and policies.
- Innovation Strategy – Introduces new ideas and processes.
Your organization’s strengths and weaknesses are the foundation for your strategic human resource management. There isn’t a single best tactic. Instead, the best strategy depends on the situation.
4. Develop Tactics
Develop HR techniques you’ll use to implement your strategies. There are two kinds of tactics:
- Direct Tactics – These involve implementing your strategies immediately. Examples include hiring additional staff, promoting more people, giving raises to employees, and employee retention strategies.
- Indirect Tactics – These involve using other resources to support your strategies. Examples include advertising, training, outsourcing services, etc.
When developing strategic human resource management tactics, think about the results you expect from each tactic. Do you need immediate results? Or can you wait until later? How much money will you need? How much time do you have before you need to start seeing results?
It would be best to keep in mind that you can only do what you have authority over. So, if you’re trying to promote employees but they report directly to someone else, you won’t be able to do anything about it.
5. Plan Implementation
Planning is determining when, where, and how to execute each tactic. Planning includes deciding whether to act now, wait until later, or do nothing.
While implementing, it’s essential to closely monitor different factors that may affect the composition of a workplace. These factors include:
- Age – Older employees tend to have more significant experience than younger ones. Younger employees are usually less experienced. It can be hard to find good talent among young people.
- Gender – Women typically make up about half of the workforce. Men generally make up the rest. Companies with a higher proportion of female employees tend to have better performance.
- Race – People of color tend to earn lower salaries than white men. In addition, they are less likely to receive promotions.
6. Monitor Performance
Monitoring results is the process of evaluating what has happened after implementation. Monitoring includes measuring performance against pre-determined benchmarks. It also includes assessing the impact of any changes made by strategic HR management to improve effectiveness.
Monitoring performance is an ongoing activity. It requires constant attention. Monitoring helps determine what works and what doesn’t.
There are several tools you can use, including:
- Observation
7. Evaluate Performance
Evaluating performance is critical in any HR department. It is the process of comparing actual results to expected outcomes. Evaluation can be done by analyzing data collected through monitoring and evaluation.
Evaluating your performance is crucial because it lets you know if your strategies are working. If not, then you need to change them. For example, if your HR strategies aren’t producing desired results, you might consider changing your approach, including outsourcing strategic human resource services.
Including strategic human resource management in the overall business strategy help with creating a productive environment, but it also helps with other crucial aspects such as retaining employees.
If the human resource department succeeds in creating an effective strategy, it brings value to the organization.
Take time to create the human resource management strategy. Having the right plan creates a streamlined process that’s easy to follow. Good luck.
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16.1 Strategic Human Resource Management
Figure 16.1
Strategic human resource management ensures that the organization’s human resources are in the right place at the right time to secure competitive advantage.
Peter Miller – Chess Pieces – CC BY-NC-ND 2.0.
What’s in It for Me?
Reading this chapter will help you do the following:
- Understand the scope and changing role of strategic human resource management (SHRM) in principles of management.
- Visualize the battlefield in the war for talent.
- Engage in effective selection and placement strategies.
- Understand the roles of pay structure and pay for performance.
- Design a high-performance work system.
- Use the human resources Balanced Scorecard to gauge and proactively manage human capital, including your own.
You have probably heard the saying, people make the place . In today’s fast-changing environment, organizations need employees who understand the organization’s strategy and are empowered to execute it. To achieve this, organizations need to follow a strategic human resource management (SHRM) approach. SHRM ensures that people are a key factor in a firm’s competitive advantage. Thus, as summarized in the following figure, SHRM is an integral part of the control portion of the planning-organizing-leading-controlling (P-O-L-C) framework.
Figure 16.2 The P-O-L-C Framework
Organizations need human resources (HR) to be a partner in identifying, attracting, and hiring the type of employees who will be most qualified to help the company achieve its goals. SHRM requires attracting the right employees to the company, identifying metrics to help employees stay on target to meet the company’s goals, and rewarding them appropriately for their efforts so that they stay engaged and motivated. Having all these components in place—designing a high-performance work system—improves organizational performance and unleashes employee talent.
Figure 16.3
Strategic human resource management is concerned with the “people” factor as a source of competitive advantage.
sheriyates – Pixabay – CC0 public domain.
Principles of Management Copyright © 2015 by University of Minnesota is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License , except where otherwise noted.
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- Human Resource Planning (HRP)
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What Is the Goal of Human Resource Planning (HRP)?
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Human Resource Planning (HRP) Meaning, Process, and Examples
Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.
What Is Human Resource Planning (HRP)?
Human resource planning (HRP) is the continuous process of systematic planning to achieve optimum use of an organization's most valuable asset—quality employees. Human resources planning ensures the best fit between employees and jobs while avoiding manpower shortages or surpluses.
There are four key steps to the HRP process. They include analyzing present labor supply, forecasting labor demand, balancing projected labor demand with supply, and supporting organizational goals. HRP is an important investment for any business as it allows companies to remain both productive and profitable.
Key Takeaways
- Human resource planning (HRP) is a strategy used by a company to maintain a steady stream of skilled employees while avoiding employee shortages or surpluses.
- Having a good HRP strategy in place can mean productivity and profitability for a company.
- There are four general steps in the HRP process: identifying the current supply of employees, determining the future of the workforce, balancing between labor supply and demand, and developing plans that support the company's goals.
Michela Buttignol
What Is Human Resource Planning (HRP) Used For?
Human resource planning allows companies to plan ahead so they can maintain a steady supply of skilled employees. The process is used to help companies evaluate their needs and to plan ahead to meet those needs.
Human resource planning needs to be flexible enough to meet short-term staffing challenges while adapting to changing conditions in the business environment over the longer term. HRP starts by assessing and auditing the current capacity of human resources.
Here, identifying a company's skill set and targeting the skills a company needs enables it to strategically reach business goals and be equipped for future challenges. To remain competitive, businesses may need advanced skills or to upskill their employees as the market environment evolves and changes.
To retain employees and remain competitive, HRP often looks at organizational design, employee motivation, succession planning, and increasing return on investment overall.
Challenges of Human Resource Planning (HRP)
The challenges to HRP include forces that are always changing. These include employees getting sick, getting promoted, going on vacation, or leaving for another job. HRP ensures there is the best fit between workers and jobs, avoiding shortages and surpluses in the employee pool.
To help prevent future roadblocks and satisfy their objectives, HR managers have to make plans to do the following:
- Find and attract skilled employees.
- Select, train, and reward the best candidates.
- Cope with absences and deal with conflicts.
- Promote employees or let some of them go.
Investing in HRP is one of the most important decisions a company can make. After all, a company is only as good as its employees, and a high level of employee engagement can be essential for a company's success. If a company has the best employees and the best practices in place, it can mean the difference between sluggishness and productivity, helping to lead a company to profitability.
What Are the Four Steps to Human Resource Planning (HRP)?
There are four general, broad steps involved in the human resource planning process. Each step needs to be taken in sequence in order to arrive at the end goal, which is to develop a strategy that enables the company to successfully find and retain enough qualified employees to meet the company's needs.
Analyzing labor supply
The first step of human resource planning is to identify the company's current human resources supply. In this step, the HR department studies the strength of the organization based on the number of employees, their skills, qualifications, positions, benefits, and performance levels.
Forecasting labor demand
The second step requires the company to outline the future of its workforce. Here, the HR department can consider certain issues like promotions, retirements, layoffs, and transfers—anything that factors into the future needs of a company. The HR department can also look at external conditions impacting labor demand , such as new technology that might increase or decrease the need for workers.
Balancing labor demand with supply
The third step in the HRP process is forecasting the employment demand. HR creates a gap analysis that lays out specific needs to narrow the supply of the company's labor versus future demand. This analysis will often generate a series of questions, such as:
- Should employees learn new skills?
- Does the company need more managers?
- Do all employees play to their strengths in their current roles?
Developing and implementing a plan
The answers to questions from the gap analysis help HR determine how to proceed, which is the final phase of the HRP process. HR must now take practical steps to integrate its plan with the rest of the company. The department needs a budget , the ability to implement the plan, and a collaborative effort with all departments to execute that plan.
Common HR policies put in place after this fourth step may include policies regarding vacation, holidays, sick days, overtime compensation, and termination.
The goal of HR planning is to have the optimal number of staff to make the most money for the company. Because the goals and strategies of a company change over time, human resource planning must adapt accordingly. Additionally, as globalization increases, HR departments will face the need to implement new practices to accommodate government labor regulations that vary from country to country.
The increased use of remote workers by many corporations will also impact human resource planning and will require HR departments to use new methods and tools to recruit, train, and retain workers.
Why Is Human Resource Planning Important?
Human resource planning (HRP) allows a business to better maintain and target the right kind of talent to employ—having the right technical and soft skills to optimize their function within the company. It also allows managers to better train the workforce and help them develop the required skills.
What Is "Hard" vs. "Soft" Human Resource Planning?
Hard HRP evaluates various quantitative metrics to ensure that the right number of the right sort of people are available when needed by the company. Soft HRP focuses more on finding employees with the right corporate culture, motivation, and attitude. Often these are used in tandem.
What Are the Basic Steps in HRP?
HRP begins with an analysis of the available labor pool from which a company can draw. It then evaluates the firm's present and future demand for various types of labor and attempts to match that demand with the supply of job applicants.
Quality employees are a company's most valuable asset. Human resource planning involves the development of strategies to ensure that a business has an adequate supply of employees to meet its needs and can avoid either a surplus or a lack of workers.
There are four general steps in developing such a strategy: first, analyzing the company's current labor supply; second, determining the company's future labor needs; third, balancing the company's labor needs with its supply of employees; and fourth, developing and implementing the HR plan throughout the organization.
A solid HRP strategy can help a company be both productive and profitable.
International Journal of Business and Management Invention. " Human Resource Planning-An Analytical Study ," Page 64.
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The guide to Strategic Human Resource Management (SHRM)
Strategic Human Resource Management (Strategic HRM or SHRM) means acquiring, managing and developing employees and other human resources in accordance with corporate / business strategy and long-term organizational goals.
The main idea behind strategic HRM is to go beyond the daily duties and administration of HR (maintaining personnel records, managing benefits, ensuring compliance…) with a more strategic outlook on human resources.
That’s why it’s also called “people strategy”. There are many different ways to approach long-term human resource management and each organization must find its own optimal strategy according to their business goals.
In this blog post we’ll overview the main elements of strategic human resource management. We’ll also add some best practices, different approaches, and overall tips on long-term human resource management.
Although strategic human resource management is most frequently present in bigger organizations, there are many great ideas from the HRM layer that can be applied to any organization.
The main benefits of Strategic Human Resource Management
Strategic outlook in human resources, aligning business strategy with hr strategy, the strategic human resource management plan.
- Matching human resources to the future needs
- Shaping the right organizational culture
- Formal HR policies
The main challenges of strategic HRM
There’s no good business strategy without taking people or human resources into account. At the end of the day, people are not the only thing in an organization, but are simultaneously everything in an organization.
People are, without a doubt, the most important organizational asset. Only with the right people can an organization’s continuous growth and improvement be ensured.
The main benefits of Strategic HRM activities are:
- Matching employment and employee development plans to future organizational needs
- Developing a unique and attractive corporate culture
- Providing better focus for employees on corporate goals and increased productivity
- Answering key strategic HRM questions ( remote work , outsourcing, office outline…)
- Addressing diversity, inclusion, and other strategic HR policies
One very important aspect of strategic human resource management is also the plan for internal leadership development , since that’s many times the bottle neck for the further growth of an organization.
In addition, successful implementation of the strategic human resource management plan greatly depends on good collaboration between leaders.
Strategic human resource management starts with forging a strategic outlook on human resources in the organization. A SWOT analysis is a great help in gaining a strategic perspective, and can also be applied to the HR function.
Performing a SHRM SWOT analysis should give answers to the following questions:
- Strengths – What are the greatest strengths of an organization when it comes to people? These can be leadership, cultural elements, payment and benefits, etc.
- Weaknesses – On the other hand, what are the greatest weaknesses? Internal challenges and struggles such as high fluctuation, poor time management, etc.
- Opportunities – What are the greatest HR opportunities outside the organization? This could be an opportunity to hire a remote work force, open a new subsidiary to attract talent, etc.
- Threats – What are the greatest threats in the environment? These can be increasing labor costs, talent shortage, legislation changes, etc.
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To be on the same page, let’s first summarize what a business strategy is. A business strategy is a set of business decisions about where and how to invest money, time, energy, skills, creative potential and other resources of the company , especially in the long run.
A good strategy identifies the key strengths and opportunities of an organization which can lead to multiplying results on the market.
The business strategy answers the fundamental question of what the company is focusing on as a core competency and what things the company is not doing, with the goal of avoiding becoming unfocused and playing on the markets where it simply can’t win.
Strategy, then, means a concentration of resources and the application of those resources to the areas that can bring the greatest outcomes for all stakeholders.
In addition to monetary resources, where to invest human resources (time, skills, potential…), plays a big part in the strategy equation.
Successful implementation of the strategy means concentrating resources on a few selected key objectives / opportunities. Thus, strategy always also means realignment and reallocation of human resources.
For this reason, the human resource strategy must be completely aligned with the business (or corporate) strategy.
Besides making sure the organization has the right number of people with the right skills at the right time , who are committed and fit the culture, strategic human resource management helps with the following aspects when implementing a business strategy:
- Helping executives to communicate the vision and mission of the company
- Implementing core values into the organizational culture
- Focusing employees on the key organizational goals
- Promoting commitment, agility and productivity among employees
The strategic human resource management plan is part of the business strategy that addresses the people aspect.
It’s a document that answers the question of where organization is at the moment regarding human resources, where it wants to be, and outlines the plan for how to get there.
The HR strategic document addresses all the main strategic HR points; from matching human resources to future organizational needs, long-term people development, developing the desired organizational culture, ensuring a competitive salary, managing employee performance, etc.
Let’s address the key elements of a strategic human resource management plan.
Strategic human resource management planning starts with analyzing the current state of HR in the organization , including the number of employees (and outsourcing partners if necessary), their knowledge, skills and other abilities, as well as their development and promotion potential and so on.
The second step is to prepare the forecast of HR requirements according to the business strategy and growth plans on different markets.
That includes the number of new positions in a specific period, supply of needed talent on the market, organizational attractiveness for that talent, labor costs, etc.
The current and future HR requirements should provide a clear picture of the gap that needs to be filled.
In this regard, the strategic human resource management plan should give a clear answer to what new jobs will be needed and when, who to promote, and what new employees to hire, where it would be better to go with outsourcing, and how to further evolve the leadership structure.
Based on that, the strategic human resource plan should address:
- Recruitment strategies and tactics
- Employee development strategies and tactics
- Performance management strategies and tactics
- Outsourcing development strategies and tactics
- Changes in the organizational structure and succession planning
- Leadership capacity building
- Reward system
An organizational culture eats strategy for breakfast. That’s a famous quote from Peter Drucker, one of the greatest management consultants of all time.
That means an important role of strategic human resource management is to help shape an organizational culture that will support the business goals defined in the overall strategy.
“If you could get all the people in an organization rowing in the same direction, you could dominate any industry, in any market, against any competition, at any time.” Patrick Lencioni
Changing organizational culture is one of the hardest things to do in an organization. Nevertheless, it’s one of the greatest assets of any successful company. A strong culture brings at least the following benefits:
- Increased employee engagement and productivity
- Lower employee turnover and the ability to attract top talent
- Improvement in employees mental and physical wellbeing
- Strong brand identity and evangelism, and thus customer satisfaction
- A higher level of innovation
In the strategic human resource plan, it should be clearly defined how a company’s culture will be shaped in order to support corporate and HR goals.
On the strategic level, at the very least the following aspects of the company’s culture should be defined:
- Stories – The company’s vision, mission, why, success stories, role models, etc.
- Values, rituals and routines – The desired daily behavior, prioritization system, greeting style, teambuilding events, formal and informal events, etc.
- Symbols – Uniforms, dress codes, brand book implementation, etc.
- Climate, atmosphere – The feeling in the air when you enter the room (relaxed, morbid, tense…).
- Level of control and power structures.
Implementation of a new (HR) strategy always requires growth in an organization, and thus changes are implemented.
Many times, these changes are closely connected with a changing company culture. A strategy that does not identify the main HR and other internal challenges and address them is not really a strategy.
An important part of strategic human resource planning are formal HR policies that greatly influence the company’s culture and productivity. HR Policies define rules that employees must obey.
These are much more tangible than the cultural aspects. Many times, organizations must make changes in their policies or adopt new ones. An example would be adopting a new remote work policy with the goal of retaining or attracting top talent.
Some examples of such policies are:
- Anti-harassment, non-discrimination, diversity and inclusion policies
- Time and attendance tracking and pay policy
- Maternity leave and time-off benefits policy
- Meal and break periods policy
- Health and safety policy
- Bring-your-own-device policy
- Remote work policy
- Social media policy
With HR policies come many legal documents, standard procedure explanations, and forms. As an organization grows, there are usually more and more policies adapted.
We must also not forget that many companies employ different software solutions to support HR processes.
At Spica, we provide a time and attendance tracking solution that’s completely flexible so it can fit company’s policies in this regard; and it even supports even remote work.
In the end, it’s one thing to write a strategy, and another to implement it. The main barriers when implementing a strategic human resource management plan are naturally connected to people, especially on the leadership level.
This is completely normal, namely because with each change some people in the organization gain and others lose. It rarely happens that all people support the new strategy, although there must be critical mass.
The main challenges of implementing such a strategy are:
- Lack of support and commitment from top management
- High resistance from middle management
- Conflicts between departments
- Limited resources to implement the strategy
- Trying to implement too many changes at once
When implementing a strategic human resource management plan, it’s important to track progress and make alignments along the way.
Even though strategic human resource management is a long-term thing, staying agile in the implementation phase is always necessary. Based on internal and external feedback, and changes in the circumstances, the strategy must be adjusted in time.
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2. Developing and Implementing Strategic HRM Plans
2.1 strategic planning, learning objectives.
- Explain the differences been HRM and personnel management.
- Be able to define the steps in HRM strategic planning.
In the past, human resource management (HRM) was called the personnel department. In the past, the personnel department hired people and dealt with the hiring paperwork and processes. It is believed the first human resource department was created in 1901 by the National Cash Register Company (NCR). The company faced a major strike but eventually defeated the union after a lockout. (We address unions in Chapter 12 “Working with Labor Unions”.) After this difficult battle, the company president decided to improve worker relations by organizing a personnel department to handle grievances, discharges, safety concerns, and other employee issues. The department also kept track of new legislation surrounding laws impacting the organization. Many other companies were coming to the same realization that a department was necessary to create employee satisfaction, which resulted in more productivity. In 1913, Henry Ford saw employee turnover at 380 percent and tried to ease the turnover by increasing wages from $2.50 to $5.00, even though $2.50 was fair during this time period. Michael Losey, “HR Comes of Age,” HR Magazine , March 15, 1998, accessed July 11, 2011, http://findarticles.com/p/articles/mi_m3495/is_n3_v43/ai_20514399 . Of course, this approach didn’t work for long, and these large companies began to understand they had to do more than hire and fire if they were going to meet customer demand.
More recently, however, the personnel department has divided into human resource management and human resource development, as these functions have evolved over the century. HRM is not only crucial to an organization’s success, but it should be part of the overall company’s strategic plan, because so many businesses today depend on people to earn profits. Strategic planning plays an important role in how productive the organization is.
Table 2.1 Examples of Differences between Personnel Management and HRM
Most people agree that the following duties normally fall under HRM. Each of these aspects has its own part within the overall strategic plan of the organization:
- Staffing. Staffing includes the development of a strategic plan to determine how many people you might need to hire. Based on the strategic plan, HRM then performs the hiring process to recruit and select the right people for the right jobs. We discuss staffing in greater detail in Chapter 4 “Recruitment”, Chapter 5 “Selection”, and Chapter 6 “Compensation and Benefits”.
- Basic workplace policies. Development of policies to help reach the strategic plan’s goals is the job of HRM. After the policies have been developed, communication of these policies on safety, security, scheduling, vacation times, and flextime schedules should be developed by the HR department. Of course, the HR managers work closely with supervisors in organizations to develop these policies. Workplace policies will be addressed throughout the book.
- Compensation and benefits. In addition to paychecks, 401(k) plans, health benefits, and other perks are usually the responsibility of an HR manager. Compensation and benefits are discussed in Chapter 6 “Compensation and Benefits” and Chapter 7 “Retention and Motivation”.
- Retention. Assessment of employees and strategizing on how to retain the best employees is a task that HR managers oversee, but other managers in the organization will also provide input. Chapter 9 “Successful Employee Communication”, Chapter 10 “Managing Employee Performance”, and Chapter 11 “Employee Assessment” cover different types of retention strategies, from training to assessment.
- Training and development. Helping new employees develop skills needed for their jobs and helping current employees grow their skills are also tasks for which the HRM department is responsible. Determination of training needs and development and implementation of training programs are important tasks in any organization. Training is discussed in great detail in Chapter 9 “Successful Employee Communication”, including succession planning. Succession planning includes handling the departure of managers and making current employees ready to take on managerial roles when a manager does leave.
- Regulatory issues and worker safety. Keeping up to date on new regulations relating to employment, health care, and other issues is generally a responsibility that falls on the HRM department. While various laws are discussed throughout the book, unions and safety and health laws in the workplace are covered in Chapter 12 “Working with Labor Unions” and Chapter 13 “Safety and Health at Work”.
In smaller organizations, the manager or owner is likely performing the HRM functions. Jan de Kok and Lorraine M. Uhlaner, “Organization Context and Human Resource Management in the Small Firm” (Tinbergen Institute Discussion Papers 01-038/3, Tinbergen Institute, 2001), accessed August 13, 2011, http://ideas.repec.org/s/dgr/uvatin.html . They hire people, train them, and determine how much they should be paid. Larger companies ultimately perform the same tasks, but because they have more employees, they can afford to employ specialists, or human resource managers, to handle these areas of the business. As a result, it is highly likely that you, as a manager or entrepreneur, will be performing HRM tasks, hence the value in understanding the strategic components of HRM.
HRM vs. Personnel Management
Human resource strategy An elaborate and systematic plan of action developed by the human resource department. is an elaborate and systematic plan of action developed by a human resource department. This definition tells us that an HR strategy includes detailed pathways to implement HRM strategic plans and HR plans. Think of the HRM strategic plan A written document that consists of the major objectives the organization wants to achieve. as the major objectives the organization wants to achieve, and the HR plan Detailed, written plan to ensure the strategic plan is achieved. as the specific activities carried out to achieve the strategic plan. In other words, the strategic plan may include long-term goals, while the HR plan may include short-term objectives that are tied to the overall strategic plan. As mentioned at the beginning of this chapter, human resource departments in the past were called personnel departments. This term implies that the department provided “support” for the rest of the organization. Companies now understand that the human side of the business is the most important asset in any business (especially in this global economy), and therefore HR has much more importance than it did twenty years ago. While personnel management mostly involved activities surrounding the hiring process and legal compliance, human resources involves much more, including strategic planning, which is the focus of this chapter. The Ulrich HR model, a common way to look at HRM strategic planning, provides an overall view of the role of HRM in the organization. His model is said to have started the movement that changed the view of HR; no longer merely a functional area, HR became more of a partnership within the organization. While his model has changed over the years, the current model looks at alignment of HR activities with the overall global business strategy to form a strategic partnership. David Ulrich and Wayne Brockbank, The HR Value Proposition (Boston: Harvard Business Press, 2005), 9–14. His newly revised model looks at five main areas of HR:
- Strategic partner. Partnership with the entire organization to ensure alignment of the HR function with the needs of the organization.
- Change agent. The skill to anticipate and respond to change within the HR function, but as a company as a whole.
- Administrative expert and functional expert. The ability to understand and implement policies, procedures, and processes that relate to the HR strategic plan.
- Human capital developer. Means to develop talent that is projected to be needed in the future.
- Employee advocate . Works for employees currently within the organization.
According to Ulrich, David Ulrich, “Evaluating the Ulrich Model,” Acerta, 2011, accessed July 11, 2011, http://www.goingforhr.be/extras/web-specials/hr-according-to-dave-ulrich#ppt_2135261 . implementation of this model must happen with an understanding of the overall company objectives, problems, challenges, and opportunities. For example, the HR professional must understand the dynamic nature of the HRM environment, such as changes in labor markets, company culture and values, customers, shareholders, and the economy. Once this occurs, HR can determine how best to meet the needs of the organization within these five main areas.
To be successful in writing an HRM strategic plan, one must understand the dynamic external environment.
HRM as a Strategic Component of the Business
David Ulrich discusses the importance of bringing HR to the table in strategic planning.
Keeping the Ulrich model in mind, consider these four aspects when creating a good HRM strategic plan:
- Make it applicable. Often people spend an inordinate amount of time developing plans, but the plans sit in a file somewhere and are never actually used. A good strategic plan should be the guiding principles for the HRM function. It should be reviewed and changed as aspects of the business change. Involvement of all members in the HR department (if it’s a larger department) and communication among everyone within the department will make the plan better.
- Be a strategic partner. Alignment of corporate values in the HRM strategic plan should be a major objective of the plan. In addition, the HRM strategic plan should be aligned with the mission and objectives of the organization as a whole. For example, if the mission of the organization is to promote social responsibility, then the HRM strategic plan should address this in the hiring criteria.
- Involve people. An HRM strategic plan cannot be written alone. The plan should involve everyone in the organization. For example, as the plan develops, the HR manager should meet with various people in departments and find out what skills the best employees have. Then the HR manager can make sure the people recruited and interviewed have similar qualities as the best people already doing the job. In addition, the HR manager will likely want to meet with the financial department and executives who do the budgeting, so they can determine human resource needs and recruit the right number of people at the right times. In addition, once the HR department determines what is needed, communicating a plan can gain positive feedback that ensures the plan is aligned with the business objectives.
- Understand how technology can be used. Organizations oftentimes do not have the money or the inclination to research software and find budget-friendly options for implementation. People are sometimes nervous about new technology. However, the best organizations are those that embrace technology and find the right technology uses for their businesses. There are thousands of HRM software options that can make the HRM processes faster, easier, and more effective. Good strategic plans address this aspect.
HR managers know the business and therefore know the needs of the business and can develop a plan to meet those needs. They also stay on top of current events, so they know what is happening globally that could affect their strategic plan. If they find out, for example, that an economic downturn is looming, they will adjust their strategic plan. In other words, the strategic plan needs to be a living document, one that changes as the business and the world changes.
Human Resource Recall
Have you ever looked at your organization’s strategic plan? What areas does the plan address?
The Steps to Strategic Plan Creation
As we addressed in Section 2.1.2 “The Steps to Strategic Plan Creation”, HRM strategic plans must have several elements to be successful. There should be a distinction made here: the HRM strategic plan is different from the HR plan. Think of the HRM strategic plan A written document that consists of the major objectives the organization wants to achieve. as the major objectives the organization wants to achieve, while the HR plan Detailed, written plan to ensure the strategic plan is achieved. consists of the detailed plans to ensure the strategic plan is achieved. Oftentimes the strategic plan is viewed as just another report that must be written. Rather than jumping in and writing it without much thought, it is best to give the plan careful consideration.
The goal of Section 2 “Conduct a Strategic Analysis” is to provide you with some basic elements to consider and research before writing any HRM plans.
Conduct a Strategic Analysis
A strategic analysis looks at three aspects of the individual HRM department:
- Understanding of the company mission and values. It is impossible to plan for HRM if one does not know the values and missions of the organization. As we have already addressed in this chapter, it is imperative for the HR manager to align department objectives with organizational objectives. It is worthwhile to sit down with company executives, management, and supervisors to make sure you have a good understanding of the company mission and values.Another important aspect is the understanding of the organizational life cycle. You may have learned about the life cycle in marketing or other business classes, and this applies to HRM, too. An organizational life cycle Refers to the introduction, growth, maturity, and decline of the organization, which can vary over time. A different HRM strategy is needed, depending on the organizational life cycle the company is experiencing. refers to the introduction, growth, maturity, and decline of the organization, which can vary over time. For example, when the organization first begins, it is in the introduction phase, and a different staffing, compensation, training, and labor/employee relations strategy may be necessary to align HRM with the organization’s goals. This might be opposed to an organization that is struggling to stay in business and is in the decline phase. That same organization, however, can create a new product, for example, which might again put the organization in the growth phase. Table 2.2 “Lifecycle Stages and HRM Strategy” explains some of the strategies that may be different depending on the organizational life cycle.
- Understanding of the HRM department mission and values. HRM departments must develop their own departmental mission and values. These guiding principles for the department will change as the company’s overall mission and values change. Often the mission statement is a list of what the department does, which is less of a strategic approach. Brainstorming about HR goals, values, and priorities is a good way to start. The mission statement should express how an organization’s human resources help that organization meet the business goals. A poor mission statement might read as follows: “The human resource department at Techno, Inc. provides resources to hiring managers and develops compensation plans and other services to assist the employees of our company.”A strategic statement that expresses how human resources help the organization might read as follows: “HR’s responsibility is to ensure that our human resources are more talented and motivated than our competitors’, giving us a competitive advantage. This will be achieved by monitoring our turnover rates, compensation, and company sales data and comparing that data to our competitors.” Gary Kaufman, “How to Fix HR,” Harvard Business Review , September 2006, accessed July 11, 2011, http://hbr.org/2006/09/how-to-fix-hr/ar/1 . When the mission statement is written in this way, it is easier to take a strategic approach with the HR planning process.
- Understanding of the challenges facing the department. HRM managers cannot deal with change quickly if they are not able to predict changes. As a result, the HRM manager should know what upcoming challenges may be faced to make plans to deal with those challenges better when they come along. This makes the strategic plan and HRM plan much more usable.
Table 2.2 Lifecycle Stages and HRM Strategy
Source: Seattle University Presentation , accessed July 11, 2011, http://fac-staff.seattleu.edu/gprussia/web/mgt383/HR%20Planning1.ppt .
Identify Strategic HR Issues
In this step, the HRM professionals will analyze the challenges addressed in the first step. For example, the department may see that it is not strategically aligned with the company’s mission and values and opt to make changes to its departmental mission and values as a result of this information.
Many organizations and departments will use a strategic planning tool that identifies strengths, weaknesses, opportunities, and threats (SWOT analysis) to determine some of the issues they are facing. Once this analysis is performed for the business, HR can align itself with the needs of the business by understanding the business strategy. See Table 2.3 “Sample HR Department SWOT Analysis for Techno, Inc.” for an example of how a company’s SWOT analysis can be used to develop a SWOT analysis for the HR department.
Once the alignment of the company SWOT is completed, HR can develop its own SWOT analysis to determine the gaps between HR’s strategic plan and the company’s strategic plan. For example, if the HR manager finds that a department’s strength is its numerous training programs, this is something the organization should continue doing. If a weakness is the organization’s lack of consistent compensation throughout all job titles, then the opportunity to review and revise the compensation policies presents itself. In other words, the company’s SWOT analysis provides a basis to address some of the issues in the organization, but it can be whittled down to also address issues within the department.
Table 2.3 Sample HR Department SWOT Analysis for Techno, Inc.
Prioritize Issues and Actions
Based on the data gathered in the last step, the HRM manager should prioritize the goals and then put action plans together to deal with these challenges. For example, if an organization identifies that they lack a comprehensive training program, plans should be developed that address this need. (Training needs are discussed in Chapter 8 “Training and Development”.) An important aspect of this step is the involvement of the management and executives in the organization. Once you have a list of issues you will address, discuss them with the management and executives, as they may see other issues or other priorities differently than you. Remember, to be effective, HRM must work with the organization and assist the organization in meeting goals. This should be considered in every aspect of HRM planning.
Draw Up an HRM Plan
Once the HRM manager has met with executives and management, and priorities have been agreed upon, the plans are ready to be developed. Detailed development of these plans will be discussed in Section 2.2 “Writing the HRM Plan”. Sometimes companies have great strategic plans, but when the development of the details occurs, it can be difficult to align the strategic plan with the more detailed plans. An HRM manager should always refer to the overall strategic plan before developing the HRM strategic plan and HR plans.
Even if a company does not have an HR department, HRM strategic plans and HR plans should still be developed by management. By developing and monitoring these plans, the organization can ensure the right processes are implemented to meet the ever-changing needs of the organization. The strategic plan looks at the organization as a whole, the HRM strategic plan looks at the department as a whole, and the HR plan addresses specific issues in the human resource department.
Key Takeaways
- Personnel management and HRM are different ways of looking at the job duties of human resources. Twenty years ago, personnel management focused on administrative aspects. HRM today involves a strategic process, which requires working with other departments, managers, and executives to be effective and meet the needs of the organization.
- In general, HRM focuses on several main areas, which include staffing, policy development, compensation and benefits, retention issues, training and development, and regulatory issues and worker protection.
- To be effective, the HR manager needs to utilize technology and involve others.
- As part of strategic planning, HRM should conduct a strategic analysis, identify HR issues, determine and prioritize actions, and then draw up the HRM plan.
- What is the difference between HR plans and HRM strategic plans? How are they the same? How are they different?
- Of the areas of focus in HRM, which one do you think is the most important? Rank them and discuss the reasons for your rankings.
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Requirement Forecasting human requirements involves determining the number and types of employees needed. Availability When employee requirements have been analyzed, the firm determines whether there is a surplus or shortage of manpower What are the four (4) aspects of Human Resource Planning? 1. Systematic Forecasting of Manpower (needs) 2.
Strategic human resource management involves a future-oriented process of developing and implementing HR programs that address and solve business problems and directly contribute to major...
2.1 Strategic Planning - Human Resource Management 2.1 Strategic Planning Learning Objectives Explain the differences been HRM and personnel management. Be able to define the steps in HRM strategic planning. In the past, human resource management (HRM) was called the personnel department.
2. Define HR strategy: Create a roadmap for how HR can sync its functions with what the business is trying to accomplish. The goal is to leverage human capital in ways that will help build a competitive advantage for the organization. Aligning HR products and services. 3. Segment HR customers: Not all HR customers are equal. Segment your ...
4 steps to strategic human resources planning. Assess current HR capacity. Forecast HR requirements. Develop talent strategies. Review and evaluate. It's easy to understand the importance of the human resource management planning process—the process by which organizations determine how to properly staff to meet business needs and customer ...
Gartner defines strategic HR planning like this: "HR leaders plan for business risks and opportunities by prioritizing and allocating resources to HR initiatives.". When put into action, this includes: Aligning business and HR strategies. Defining HR priorities relative to critical business initiatives. Adjusting the execution of ...
Strategic Human Resource Management aims to align the focus of HRM with business to achieve objectives through the strategic deployment of a highly committed and capable workforce, using a range of cultural, structural, and personnel techniques ( Storey, 1995 ). These techniques include hiring, promoting, and rewarding employees, building and ...
The days when strategic planning was a once-a-year, set-it-and-forget exercise are over. Today's rapidly changing business environment requires HR strategies to adapt. Gartner research shows: Most organizations (66%) say the top barrier to effective strategic planning is the lack of integration with business needs.
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Conclusion. Strategic human resource management is a process that helps the human resources department maximize the potential of its workforce through strategic planning, talent management, leadership development, organizational design, and performance management. In the past, strategic HR management was an administrative function.
To achieve this, organizations need to follow a strategic human resource management (SHRM) approach. SHRM ensures that people are a key factor in a firm's competitive advantage. Thus, as summarized in the following figure, SHRM is an integral part of the control portion of the planning-organizing-leading-controlling (P-O-L-C) framework.
Human Resource Planning - HRP: Human resource planning, or HRP, is the ongoing, continuous process of systematic planning to achieve optimum use of an organization's most valuable asset — its ...
The strategic human resource management plan. The strategic human resource management plan is part of the business strategy that addresses the people aspect. It's a document that answers the question of where organization is at the moment regarding human resources, where it wants to be, and outlines the plan for how to get there.
1.Strategic HR planning requires all of the following EXCEPT ____________. Environmental scanning Tax analysis Labor market analysis and forecasting Gap analysis 2. Which of the following contributes the most in transforming the labor market? The increasing percentage of men in the workforce The aging workforce in several developed countries The
Human resources planning is: is a process that identifies current and future human resources needs for an organization to achieve its goals. The competitive environment includes all the following except: subordinates. The process of setting procedures for making decisions about the organization's long-term goals and strategies is called:
Answer 4 months ago The correct answer to your question is: b) Tax analysis Explanation Strategic HR planning is a process that identifies current and future human resources needs for an organization Discover more from: Human Resource Management (3 credits BUS 303 The University of Arizona Global Campus 166 Documents Go to course 8
Strategic planning plays an important role in how productive the organization is. Table 2.1 Examples of Differences between Personnel Management and HRM. Personnel Management Focus. HRM Focus. Administering of policies. Helping to achieve strategic goals through people. Stand-alone programs, such as training.
Answer & Explanation Solved by verified expert Answered by gorgonia Strategic HR planning requires all of the following EXCEPT ? - Where are the options??? job Analysis is a tool available from the Department of Labor for the purpose of gathering information about jobs.
Strategic HR management includes all but one of the following. Name the exception. A. Financial planning B. Training and development C. Performance management D. Recruiting talent Click the card to flip 👆 A. Financial planning Click the card to flip 👆 1 / 34 Flashcards Learn Test Match Q-Chat Created by
Step-by-step solution. Step 1 of 3. Option A, use of the firm's strategic plan, is integral to the planning process because this is where HR managers start the process to forecast needs. Option A is incorrect. Chapter 9, Problem 21TYS is solved. View this answer. View a sample solution.
Study with Quizlet and memorize flashcards containing terms like Human resources planning is: Select one: a. a technique that identifies the critical aspects of a job. b. the process of anticipating and making provision for movement of people into, within, and out of an organization. c. the process of setting major organizational objectives and developing comprehensive plans to achieve these ...