Strategizing For HR - human resources departments - management issues

HR Magazine, Feb, 2001 by Kathryn Tyler

A well-written business plan can earn you a seat at the table with top management.

If you thought business plans, also called strategic plans, were only of CEOs and dot-com entrepreneurs, think again. Business plans can be a boon to HR departments as well. If you haven't already done s, now may be the time to develop your own HR business plan.

An HR plan can help you delineate your goals and your strategies for achieving them. It enables you to go beyond day-to-day tasks to see the larger purpose of your department and how in functions within the company. It helps you "align the resources and department to the broader needs of the organization," says Rogers Davis, assistant chancellor of human resources for the University of California, San Diego (UCSD).

Carol Asselta, SPHR, human resources manager for PECO Energy Company, a Philadelphia utility, says business plans help HR "think more holistically, to see systems rather than isolated elements. How does one thing impact another? How does everything fit?"

Having a plan also can aid communication within the department and with those outside HR, say experts interviewed for this article.

Davis, whose department is on its third strategic plan, says it "helps us communicate effectively what everyone is doing and know when progress is made." Asselta says having a business plan can help HR show executives the business rationale for its decisions by demonstrating how HR actions tie in to the company's overall goals.

By contrast, the absence of a business plan can leave an HR department adrift in a sea of uncertainty. "The alternative is a haphazard approach where you are constantly putting out fires, with no visions of where you should be or what you should be doing to get there," says Lee Hargrave, author of Plan for Profitability!: How to Write a Strategic Business Plan (Four Seasons Publishers, 1999).

Robert G. Stovall, principal of Robert G. Stovall Consulting, an HR solutions firm in Houston, asks, "If you don't have a plan, how do you know where you are going?"

What's a Business Plan?

"Most HR folks don't have a lot of training in how to do strategic planning," says Deborah Dwyer, PHR, associate professor and chair of the management department at the University of Toledo in Ohio. The first step, then, is to understand the difference between a companywide business plan and one geared specifically to the HR function.

A companywide business plan outlines the organization's current situation and where it intends to go. In its simplest form, the plan is a goal statement. But the plan also includes information on the issues facing the company--competition, opportunities, market conditions, industry changes and the company's strengths and weaknesses.

An HR plan describes what HR must do to help the company achieve the goals outlined in the business plan. An HR plan lists the action steps or milestones for meeting those goals, as well as target dates for completion and specific guidelines for measuring performance.

How far out should a plan project? It depends, says Hargrave, adding that "a typical company might have three to five years as the planning horizon."

The HR department at UCSD has a detailed two-year plan of short-term goals and a five-year plan of long-term goals, explains Davis. "We try to do plans longer than 12 months because the process is rather involved," he says.

Some question the value of making elaborate plans so far in advance, but Stovall says the planning process itself is worth the effort. Investigating the facts and your assumptions about the future will give you new information that can help you react more quickly and with greater confidence, he says.

"It is important to ensure the HR business plan integrates well and supports the overall business plan of the company," says Hargrave. "The HR business plan should be an integral part."

Identify Goals and Action Steps

It is crucial that the HR plan is in alignment with the overall business plan. Almost every organization has a business planning and budgeting cycle--and HR must ensure its business plan is a part of that process, says David Ripley, a lecturer on HR management at the University of Canterbury in Christchurch, New Zealand. "If you're not a part of that [planning and budgeting] process," says Ripley, "your effort may just be a side show that nobody but you ever looks at." And, as a result, the HR and business plans may not align. Or, HR may not get the resources it needs.

Once you understand your company's goals, you must establish your own HR departmental goals. Ripley uses a simplified approach that focuses on five questions:

* Where am I now?

* Where do I want to go?

* What's the difference between where I am and where I want to go?

* How will I get there?

* How will I know if I'm succeeding?

He also recommends focusing on these three areas:

Operational excellence. How well are you conducting basic HR operations? This includes all functional areas, such as recruiting and compensation. To determine how well you are doing in these areas, you can conduct employee surveys and review statistical data, such as turnover and absenteeism rates, in relation to industry averages.