HR Strategy and Planning

HR Strategy and Planning

HRM Strategic Process Introduction A large company such as Apple or Microsoft has millions employees all around the world. These companies have to maintain a tight HRM process and handle numerous HR issues. The managers need to constantly compare their strategy to that of their competitors while also considering a number of external factors.As an HR manager you need to be aware of your company's current condition and what you envision for the future. External factors - industry or government policies - may influence your strategy, but you should have a strategy nonetheless. You need to evaluate tools to assess the strengths and weaknesses of both individuals and the overall company. 1. Strategic Management Process1. Define the Business and Develop its Vision and MissionVision is a general statement of an organization's intended direction that evokes emotional feelings in the organization's members. The mission is more specific and shorter in term, communication "who we are, what we do, and where we're headed."2. Perform External and internal AuditsManagers create strategic plans after analyzing the external opportunities and threats the organization faces and the internal strengths and weaknesses it possesses. A commonly used tool that identifies an organization's strengths, weaknesses, opportunities, and threats is the SWOT analysis.3. Translate the Mission into Strategic GoalsThis step involves operationalizing the mission by setting specific goals4. Formulate a Strategy to Achieve Strategic GoalsThe organization's strategy acts as a bridge between where the organization is today and where it wants to be in the future. You need to create the organization's strategy as stated in its vision, mission, and strategic goals, given its opportunities, threat, strengths, and weaknesses.5. Implement the StrategyIn this step, the strategies are translated into actions and results6. Evaluate the PerformanceYou need to assess the organization's progress toward strategic goals and take corrective action, as needed. Strategic control keeps the organization's strategy up to date and identifies where adjustments need to be made.

Overview The main challenge for HRM is to always provide a set of services that align with an organization's strategic plan. A strategic plan is an outline of how an organization will match its internal strengths and weaknesses with external opportunities and threats in order to maintain a competitive advantage.The basic strategic planning process involves asking: Where are we, and we do we want to be?There are three basic challenges when formulating an HR strategy The need to support corporate productivity and performance improvement efforts The expanded role of employers' performance improvement efforts The need for HR to be more involved in designing - not just executing - the organization's strategic plan

Strategic Management Process ScenarioLet’s look at the steps of the strategic management process that Cindy can influence. At VXYZ Corp., the CEO has placed Cindy on the executive management team. This provides an opportunity for her to have an influence on defining the business strategy—Step 1. The role of HR in Step 2 is to provide external and internal audit information. These pieces of information are key to Steps 3 and 4.After the strategic goals are established, Cindy is responsible for developing the HR strategic plan and recruitment strategy. This entails conducting a workforce analysis of the current staff’s profile and turnover and assessing the employees’ competencies, including the ones needed to carry out the new strategic goal of selling computer software. As part of this process, she will work with key executives throughout VXYZ Corporation to establish key HR metrics and measures for evaluating whether or not HR results were achieved.

2. HR's Strategy Formula RoleIn many organizations, HR now plays a role in creating the HR strategy. HR is no longer just handed the strategy and asked to implement it. Globalization means more competition, more competition demands high performance, and most organizations ensure this improved performance by increasing competence and commitment levels of their employees. This makes Hr's expertise and input critical in developing the HR strategy.HR helps the top management formulate strategies by: Supplying competitive intelligence that may be useful in the strategic planning process Supplying information regarding the organization's internal human strengths and weaknesses Building a persuasive case that shows how - in specific and measurable terms - the organization's HR activities can and do contribute to creating value for the organization

3. Hr's Strategy Execution RoleThe strategy execution role of HR is to develop, implement, and enforce organizational HR policies that support the HR strategy. The basic process of aligning HR strategies and actions with business strategy entails four steps: Formulate the business strategy Identify the workforce (employees') behaviors and competencies needed to produce the outcomes that will help the organization achieve its goals Formulate HR strategic policies and actions to cultivate these employee behaviors Develop measures - metrics - to evaluate the HR department's performance

Case Study Revisited: VXYZ CorpAt VXYZ Corp., Cindy would need to examine key information about other organizations’ hiring practices, workforce competencies, and people strategies, then share this information with the CEO and others. Next, she would need to examine the employees’ strengths and weaknesses. This information would be useful for Strategic Goal #1 of the following two:Goal #1: To increase the sales of the organization's software productsGoal #2: To hire an additional 50 workers during the calendar yearBefore recruiting new employees—StrategicGoal #2—Cindy would have to formulate future workforce competencies, address new HR policies, and assess the competencies of the current employees. Then, the recruitment strategy would be put into action.

Strategy Orientated HR SystemComponents of an Organization's Basic HR StructureIn a strategy oriented HR system, HR professionals design the HR system in such a way that it helps cultivate the employee competencies and behaviors their organization needs to achieve its strategic goals. A strategy-oriented HR process consists of three basic components, which compromise what some experts refer to as an organization's basic HR architecture. HR professionals who have strategic and other other skills HR policies and activities that comprise the HR system Employee behaviors and competencies that the organization's strategy requires High-Performance Work SystemA strategy-oriented HR system plays an important role in developing high performers in an organization. Creating and maintaining a high-performance work system is HR's major strategic execution role. As part of this strategy, HR should align and cascade goals for all employees so that they are aware of the organization's mission.A way to ensure that the organization is working toward the same goals is to develop competency models. These models explain the requirements for effective performance to help ensure that employees focus on the relevant tasks. Such models help companies align internal behaviors and skills with the strategic direction of the organization.Another important factor of a sound strategy - oriented HR system is the need for the HR director to review the major HR policies and directives and ensure that they are updated and aligned with the business strategy and strategic goals.

Translating Strategy into HR Policy and PracticesHR mangers need a process to translate their organization's work into specific, actionable HR policies and practices. The basic process is to translate the strategic plan into workforce requirements in terms of employees skills, attributes, and behaviors that HR must deliver to enable the business to achieve its strategic goals. HR also needs to identify Scorecard metrics that will be used to measure the extend to which its new HR initiatives support the management's strategic goals.

Creating the HR ScorecardThe HR Scorecard is a tool used to measure and HR function's effectiveness in cultivating the employee behaviors need to achieve an organization's strategic goals. To create an HR scorecard, an HR manager must: Be aware of the organization's strategy Understand the causal links between the organization's performance and HR activities, employee behaviors, and organizational outcomes Have metric to measure all activities and results involved Steps in Using the HR Scorecard1. Define the business strategy: Organization executives begin by translating the organization's strategic plan into actionable strategic goals. 2. Outline the Organization's Value Chain: To achieve the organization's goals, employees engage in specific goal-directed activities. Managers need to understand these activities and the way each activity creates value for the organization. 3. Identify the strategically Required Organizational Outcomes: To achieve the organization's strategic goals, the organization identifies the end state or the strategic organizational outcomes.4. Identify the Required Workforce Behavior and Competencies: Identify the key employee behaviors to be exhibited in the organization to produce the desired strategic outcomes.5. Identify the Strategically Relevant HR System Policies and Activities: HR identifies the activities and policies that will assist in employees obtaining the identified competencies. For example, what types of training or organizational development interventions are needed to improve or update employee competencies. 6. Design the HR Scorecard Measurement System: Those metrics and measure are defined that will be used to verify if the outcomes have been achieved. If the outcomes are achieved, these metrics and measure will help identify the levels of the outcomes. 7. Evaluate the Measurement System: Hr periodically evaluates measure and links to make sure that they are still valid.

Using the HR ScorecardLet’s look at how Cindy implements the HR Scorecard approach at VXYZ Corp. After defining the HR strategy, Cindy meets with top VXYZ Corp. executives and discusses some key metrics for achieving VXYZ Corps.’ strategic goals. The chief financial officer (CFO) and the chief information officer (CIO) have good suggestions for metrics and measures. After the discussion, they agree that the organization’s value chain—Step 2—outlines employee knowledge and experience with using the organization’s software. In addition, employees' experience as sales representatives is critical to the organizational success—Step 3—of the first strategic goal. Cindy also discusses the key competencies needed to achieve Goal #1 and the competency assessment of the current staff—Step 4. HR discusses the need for a change in job descriptions, recruitment strategy, and additional training for the current staff to be able to sell the organization’s software products. This will entail development of new policies and procedures along with a training program and manual—Step 5.For the metrics, the HR Scorecard will include the following key measures: Number of quality hires Turnover rate of current and new hires Increase in sales, which would be independent on training effectiveness It is agreed that 90 days after the training program is completed, the group would meet and review the results of these measures. The group will then decide what additional measures might be useful and what progress is being made toward achieving the two strategic goals—Step 7.