December 12, 2008

Developing a Strategic HR Plan

What is a strategic HR plan?

A Strategic HR Plan enables organisations to align resources to corporate strategy. It provides information on how the HR function will support the goals and strategies of the organisation and ensure that HR planning and practices are consistent across the organisation. It outlines how the gaps between future and present capability will be addressed.

Why is a strategic HR plan important?
In all public sector organisations, managers have a responsibility to fulfil expectations in the areas of corporate governance, transparency of policies, accountability and economic efficiency. To achieve these responsibilities you need to be sure that you have the right people, with the right skills, in the right place, at the right time to carry out the strategy. A comprehensive strategic HR plan will ensure that you have:the capacity to deliver on strategy; a succession planning process that is strategically linked; identified and minimised capability risks; HR practices are consistent across the organisation; skill development and training policies and practices are linked to strategy; are able to monitor progress towards goals.

How does the strategic HR plan link to the strategic business plan?
The strategic HR plan supports and is aligned to the corporate mission, vision, values and strategies. It is an essential planning document. It is important that the strategic HR plan is developed only after a clear direction is established and understood. It is important that you avoid the situation where the strategic HR plan drives strategy.

What process do we use?
Decide where your organisation is now in the lifecycle of an enterprise: the start-up stage, the growth stage, the mature stage or the decline stage (Lewin 1998). Then formulate a clear picture of your future and look for ways of getting there. The HR Management Portfolio includes:

The model you use should therefore begin with the future:

Identify future HR needs
Using the strategic plan as a guiding document, identify the future HR needs of the organisation.

You need to ask questions like:What is the nature of our work?, What type of culture will support productivity?, What skills do we need to deliver results?, Where are those skills and how are we tapping into them?, How large is our organisation?, What systems and processes do we need?, How are we making sure peoples’ skills match our needs?, What risks are associated with this future?

Consider present HR capability
You need to ask questions like: With the future in mind, what is our current capability?, How are we doing against benchmarks?, What are our strengths and weaknesses?, Are there legislative requirements we need to consider?, What are we doing well now, that we need to do more of in the future?, Where do the risks lie?, What HR issues may prevent us from getting to the future we have agreed on?, What current systems will support or hinder our progress?

Identify gaps between present capability and future needs
Compare the future needs with the current capability and identify any significant gaps that appear. These can be in a number of areas including policies and procedures, capability, resource allocation.
The questions to ask are: Where are significant gaps between present and future?, and How can they be classified?

Formulate gap strategies
The next stage is about identifying strategies that will address the gaps you have identified.

These strategies will affect: job/work design; selection/staffing; performance management; compensation/rewards; training/development; employee relations; safety and health; work force diversity.

Not all gaps will be of the same strategic importance, so you will need to set some priorities for dealing with them. For example you may find an urgent need to update your HR information system so it provides you with information that is essential for tracking progress. While this may not appear strategic, you need this to be able to identify progress.

The questions to ask are: What are the top priorities?; Where can we get some rapid progress?; How do these strategies fit with budgets?; What is the degree of change needed?

The last step is to develop the level of detail that will give you measurable goals and milestones.

What information do we need before we start?
You will need plenty of data to do this job thoroughly. Take the time to gather as much relevant information as possible. There are a variety of sources including: The strategic business plan; An analysis of future work trends; The existing HR plan; Environmental data –information about the current HR situation in the wider public sector and future trends in the sector; An audit of existing HR policies and practices – what are your strengths and weaknesses in this area; Current information on competencies across the organisation; Policies and processes related to training and development; Present risk factors; Any customer or stakeholder data on the HR performance of the organisation.

Who should be involved?
You need to strike a balance between too much input and too little. Think about the individuals inside and outside your organisation who have a strategic focus and are well informed. It is useful to get outside facilitation, either from within the organisation or from a consultant. This will allow the HR team to contribute to the process.

How do we monitor the plan?
Once the plan has been developed to a degree of detail that measures end goals and milestones, it is relatively easy to monitor progress. However you should review the plan on an annual basis at the very least to check the progress and equally importantly to check the assumptions on which the plan was based. In the MMP environment there may be changes that you have not anticipated.

Getting buy-in to the plan is important. The senior team and those involved in the HR function throughout the organisation, which increasingly is all managers, need to understand and support the plan. Their input is important during the implementation and monitoring phase.

HR strategic planning is as essential as financial planning in ensuring that the organisation achieves its goals. The HR strategic plan informs and supports policies which align and grow the skills of the people. In this sense is needs to be treated as a living document.***

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