Kim Dowdeswell and Clare Moncrieff, CEB
No matter the economic climate, the shelf life of a strategic plan is less than one year. Such a short shelf life has real implications for HR, namely increasing the importance of HR’s ability to integrate with the business on an ongoing basis. The best HR functions are focusing less on getting strategic plans right, and more on getting strategic planning right.
Value of Strategic Planning
Effective strategic planning is as dynamic as the economic climate; incorporates market sensing; and aligned to forward-looking tools.
In fact, according to CEB research, improved HR support of line can increase employee performance by 21 percent and increase employee retention by 26 percent.
Challenges with Strategic Planning
Despite the importance of strategic planning, and the overarching importance of aligning talent to business objectives to deliver success for organisations today, many HR functions struggle. Specific challenges include:
- Lack of understanding around the short- and long-term strategy of the business, as well as the associated success metrics for HR
- Insufficient view of the workforce’s skills and capabilities across the enterprise, and limited insight into future potential
- Failure to identify the critical HR capabilities needed to support the business strategy, as well as the connectivity between HR sub-functions and programmes
- Absence of a framework/tools for building the business case for specific HR strategies, communicating with stakeholders, measuring success, and adapting to market dynamics
As a result, only one-third of line managers feel their HR function is effective at supporting them.
Effective strategic planning is more important now than ever. In fact, eight-in-10 HR functions are completing or will soon undergo an HR transformation.
Based on our ever-expanding database of best practices, insights, and data, we’ve outlined five essential steps that HR professionals—whether they serve in a general HR capacity, or in an HR sub-function like Learning & Development, Recruiting, Regional HR, or Total Rewards—should follow to be effective at strategic planning.
Strategic Planning Checklist
Step 1: Define Target Metrics: Select a small set of measures (no more than seven, or else metrics become too unwieldy and unmemorable) that describe the end goal required, and give target outcomes for specific milestones/intervals. It’s critical to align HR and business planning calendars; translate business priorities into HR capabilities; and assess the current state of HR effectiveness at critical HR capabilities.
Step 2: Identify the Right Activities to Move from Initial State to End State: Define manageable and realistic initiatives to accomplish the metrics devised in step one. Prioritise initiatives based on business strategy and current HR capability.
Step 3: Communicate the Strategy: Address in a clear, aspirational, and concise manner the end goal and the initiatives required to move there. To secure buy-in, customise communications for all HR’s various stakeholders.
Step 4: Identify the Critical Assumptions that Underpin the Strategy: Isolate what could steer the strategy off-course, and plan HR’s response. Expect to monitor and adapt HR strategy frequently.
Step 5: Understand and Take Action Against Key Talent Challenges: Identify workforce strengths, skills gaps and potential at a functional and company level. Use this insight to examine individual/team/functional alignment with organisational objectives and evaluate readiness to achieve future business strategy. Build an action plan for addressing talent gaps through talent acquisition and mobility strategies.
A version of this article originally appeared on CEB’s HR blog
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