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Human resource (HR) strategy maximizes the potential of an organization’s human capital so it can achieve its broader business objectives. For some employers, however, transitioning HR from a purely transactional function to a strategic one can be challenging. But considering the competitive advantages enjoyed by talent-driven organizations, it’s an obstacle worth overcoming.
What is an HR strategy?
HR strategy is a roadmap for solving an organization’s biggest challenges with people-centric solutions. This approach requires HR input during policy creation and elevates the importance of recruitment , talent management , compensation, succession planning and corporate culture.
Why is HR strategy important?
Without strategy behind it, HR remains an administrative function and business growth may be hindered. Consider, for instance, two different companies that would like to expand into new markets.
One of them is strategic and gives HR a seat at the table from the very beginning. It researches locations that would be the most advantageous from an employment standpoint and then develops a long-term plan for networking highly-qualified, passive candidates in the chosen regions.
The other company takes transactional approaches to solving problems. Instead of including HR in its expansion discussions, it delegates a hiring manager to recruit candidates without knowing if the desired talent exists in that market or if the employment rules add a significant number of unexpected obstacles.
As the first example shows, when HR is involved and integrated at many levels of an organization, it can create a powerful advantage.
How to create a human resource strategy
Creating an HR strategy means taking a hard look at an organization’s strengths, weakness, opportunities and threats – a process also known as a SWOT analysis. Every business is different, but most follow these steps:
- Understand the business and its objectives Talk to people throughout the organization to gain a full understanding of the business’s past achievements, the products or services that it offers today, and what it hopes to accomplish in the future.
- Evaluate employee skillsets Review employee performance, resumes, project history and continuing education to assess the collective workforce skill level.
- Conduct a gap analysis Determine if employees have what they need to maximize their productivity or if investments in additional resources are necessary.
- Assess talent strategy Regularly auditing compensation, benefits, work environments and employee engagement can help employers compete for new talent and retain valued workforce members.
- Develop existing employees If any employees appear ready for new challenges or have skills outside their current role, create a development plan that will allow them grow to with the business.
- Limit turnover Get to the root cause of why people leave an organization and create a comprehensive plan to address the problem and prevent labor shortages.
- Plan ahead for succession Knowing which employees can easily fill other positions, should they become vacant, helps lessen disruptions when someone abruptly leaves the organization.
- Rely on analytics Compensation history, turnover rates, employee engagement and other HR metrics can guide strategic decisions.
- Create a mission and vision statement Mission and vision statements summarize the HR strategy and serve as a litmus test for all policies and decisions thereafter.
What are the benefits of strategic human resources planning?
One of the primary benefits of syncing HR strategy with broader business initiatives is that it helps organizations allocate budgets in ways that will maximize their return on investment (ROI). Employers who take this approach to HR, may also be able to:
- Reduce turnover
- Improve employee engagement
- Enhance productivity
- Attract superior talent
- Enact better policies
- Minimize business disruptions
Best practices for implementing an HR strategy
Everyone has fires to put out, which is why being proactive rather than reactive in the workplace does not always come naturally. The good news, however, is that HR experts have perfected some tried and true methods for implementing strategy effectively. Best practices are to:
- Involve key stakeholders Strategy requires collaboration. HR professionals should be involved from the beginning and managers and other senior leaders should sign-off on the plan.
- Know the budget Without funds to support it, HR strategy quickly becomes pie in the sky. Focus on initiatives that realistically fit within the organization’s budget.
- Remember the basics Do not overlook administrative responsibilities in favor of strategy. A compliance violation will derail any plan, no matter how grand it is.
- Recognize transactional solutions The quickest answer to a problem may not always be optimal in the long run. Make it a habit of acting strategically in every endeavor.
- Monitor and adjust the strategy Measure the strategy’s effectiveness over time with key performance indicators (KPIs). If something’s not achieving the desired results, revise it accordingly.
Frequently asked questions
What are strategic hr functions.
Examples of strategic HR functions include compensation planning, recruitment, succession planning and employee development.
What are four human resource strategies?
- Limit transactional problem solving
- Be proactive, rather than reactive
- Provide people-centric solutions to large-scale challenges
- Connect people who can solve each other’s problems
What are the types of HR strategy?
There are essentially two types of HR strategies – those that are overarching and those that are specific. Overarching strategies apply to the management of an organization’s people as a whole, while specific strategies address subsets of HR, like talent management or recruitment.
How do you develop a strategic HR plan?
A strategic HR plan can be created by thoroughly evaluating an organization’s strengths, weaknesses, opportunities and threats. This is known as a SWOT analysis. Once employers know this information, they can create realistic goals that account for what they do well and where they need improvement .
This article offers practical information concerning the subject matter and is provided with the understanding that ADP is not rendering legal or tax advice or other professional services.
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5 Steps To Developing A Strategic HR Plan
Apr 18, 2018 | Blog
You’ve heard it before, and you’ll hear it again – every business needs a strategic plan.
The most successful companies develop and implement an effective strategic plan to help them pursue their organizational goals. But, even the best strategic plan won’t be very effective if the human resources function isn’t in alignment with it.
A Strategic HR Plan is a tool to help businesses align their organizational goals with their HR capabilities , and every business should have one in place to support the growth outlined in their strategic plan.
If you haven’t developed a Strategic HR Plan for your business (or if you’re still not quite sure what it is!), don’t worry!
Below we share our 5 Steps To Developing A Strategic HR Plan to help you effectively support and achieve your organization’s strategic goals.
If you’re interested in learning more about developing a Strategic HR Plan or a Strategic Plan for your business, schedule an appointment with one of our HR professionals or give us a call at 877-753-0970 .
What is a Strategic HR Plan?
A Strategic HR Plan helps organizations to align human resources to corporate strategy. It is an essential planning document built upon the corporate mission, vision, values, and goals established in the strategic business plan.
It provides information on how the HR function will support the goals and strategies of the organization, while also ensuring that HR planning and practices are consistent.
The ideal Strategic HR Plan outlines how the gaps between present and future capabilities will be addressed, enabling businesses to effectively pursue their company goals.
Why develop a Strategic HR Plan?
In most organizations, managers have a responsibility to fulfill expectations in the areas of corporate governance, transparency of policies, accountability, and economic efficiency.
For your business to be successful in these areas, you need to 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 and the ability to monitor progress towards your organization’s goals. It should also establish:
- HR practices that are consistent across the organization
- Training and skill development policies that are linked to strategy
- Succession planning processes that identify and minimize capability risks
How do you create a Strategic HR Plan?
The process for developing a Strategic HR Plan begins by identifying where your organization is now in the life-cycle of an enterprise: the start-up stage, the growth stage, the mature stage, or the decline stage.
Once you’ve decided where your company is today, formulate a clear picture of your company’s future along with ways to get there. Your Strategic HR Plan will be built upon the foundation of this strategic business plan.
Step 1: Identify Future HR Needs
Using your business’ strategic plan as a guide, identify the future HR needs of the organization. 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 organization?
- What systems and processes do we need?
- How are we making sure peoples’ skills match our needs?
- What risks are associated with this future?
Step 2: Consider Present HR Capabilities
Now consider your company’s present HR situation by asking 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?
- What current systems will support or hinder our progress?
Step 3: Identify Gaps Between Future Needs & Present Capability
Compare your future HR needs from step 1 with your present HR capabilities from step 2, and identify any significant gaps that appear.
Gaps can develop in a number of areas including policies and procedures, capability, and resource allocation. Start with these questions:
- Where do significant gaps appear between the present and future?
- How can these gaps be classified?
Step 4: Formulate Gap Strategies
Next, work to develop strategies that will address the gaps you identified in Step 3. These gap strategies may affect:
- Job/Work Design
- Selection/Staffing
- Performance Management
- Compensation/Rewards
- Training/Development
- Employee Relations
- Safety and Health
- Workforce Diversity
Not all gaps will be of the same strategic importance, so you will need to set priorities for addressing them.
For example, imagine you discovered a need to update your HR information system. Investing in a new system would provide you with employee progress data that you deemed essential for your future company goals.
The need for an upgraded HR information system should be prioritized as urgent because it’s necessary to succeed in your long-term strategic plan.
Questions you can ask to help you determine the priority of your needs include:
- What are the top priorities?
- Where can we experience rapid progress?
- How do these strategies work with our budgets?
- What is the degree of change needed?
Step 5: Share & Monitor The Plan
Sharing the Strategic HR Plan with your senior leadership and those connected to the HR function of your organization is a crucial component of its success. The more your team understands and supports the plan, the more empowered they will be to help the company achieve its goals.
It’s also important to monitor the progress of the Strategic HR Plan you develop and to communicate successes or modifications to your team.
At the very least, you should review the plan on an annual basis to verify that the goals on which the plan was based are still accurate and to make adjustments as needed.
Developing Your Plan
Developing a comprehensive Strategic HR Plan is an essential investment in helping your company achieve its goals.
A Strategic HR Plan aligns your corporate mission with your business plan, ensuring you have the capacity to deliver on strategy as you pursue your organization’s goals.
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6 Steps to Create a Strategic HR Plan [With Templates]
By Jessie Strongitharm , Aug 25, 2022
The backbone of any successful business is the people and processes behind it — that’s why creating a human resources (HR) plan is key. This strategic document drives your business forward by evaluating where your workforce is at, and comparing it to future needs.
Without an HR plan, organizations can suffer from issues that would have otherwise been avoided. From productivity pitfalls to costly employee turnover, there’s no shortage of risks you can sidestep if you do human resource planning in advance.
Not sure where to start? No worries. I’ve outlined six steps you can take to create an effective HR plan that ensures your organization is well-staffed and well-served. You’ll also find a variety of HR templates that you can customize in just a few clicks — no design expertise required.
Click to jump ahead:
What is human resource planning.
- Assess employees’ current skill levels
- Forecast your labor needs based on available information
- Revisit your organizational design
- Outline how you will manage, motivate and retain talent
- Align your workforce planning with your budget
- Establish KPIs for your human resource planning objectives
Human resource planning is the process of considering the current and future “people needs” of an organization.
This involves evaluating an organization’s workforce structure and protocols to ensure operational goals are met, productivity stays high and future demands for labor and talent can be fulfilled.
The result of this process is the creation of an HR plan, which typically takes the form of a written document. These documents tend to follow a similar structure to most strategic business plans and are created on an annual basis, by HR managers or company leaders.
Check out the template below for an example.
This eye-catching, one-page HR Strategic Plan Template offers a concise summary of your human resource planning efforts, so you can easily share info with colleagues.
Just swap out the text and visual assets for those of your choosing in Venngage’s editor , and you’re off to the races.
Return to Table of Contents
Start creating a strategic HR plan in 6 steps
Ready to create a strategic plan for the human resources that power your business? Here are six steps to help you succeed at the human resource planning process.
- Assess current employees’ skill levels
The first step to creating a future-forward HR plan is to assess employees’ current skill sets, and compare them to your operational needs moving forward. This will help you identify gaps and inform any hiring of new employees.
Employees’ skill levels can be assessed by reviewing their work history, hard and soft skills and professional growth over time.
Using a matrix is a great way to understand where the skill gaps in your current workforce exist. Below is an example that describes the skills needed for different marketing roles.
Don’t need it for marketing specifically? No worries — you can fully customize this template by swapping in your own text to examine any human resource gaps.
Another way to assess skills is by giving employees a questionnaire they can fill out. This Employee Competency Assessment Template does just that.
Based on the information collected, you’ll get a sense of what positions best suit each individual, and whether any upskilling or hiring is required.
Next in your strategic strategic HR management plan, you’ll want to consider the future. This involves accounting for any upcoming changes to your workforce, so operations can continue without error.
When forecasting labor needs, the following should be considered:
- Planned promotions
- Upcoming retirements
- Layoffs
- Personnel transfers
- Extended leaves of absence (i.e. maternity/paternity leave)
Beyond those, it’s a good idea to assess the impact of external conditions on your labor needs during your human resource planning. For example, new technological developments may decrease the amount of employees you require to operate your business.
Organizational design is the process of structuring the way a business operates so it can best achieve its goals. This is hugely important when it comes to your human resource planning process!
With a clear understanding of your organization’s strategic objectives in mind, reviewing your organizational design allows you to understand the staffing requirements you’ll need to succeed at them. This means taking into account your organizational structure and chains of command, as well as how work gets done and the way information flows.
From there, you’ll be able to see which departments need more team members so it can accomplish the organization’s objectives.
An easy way to get started is by using an organizational flow chart.
With its color coding and layout, even a new manager can quickly look at this chart to identify the people responsible for leading teams and making decisions.
And if there are any changes, it’s easy to to reflect them in the chart itself. All you need to do is customize the text and visual assets in Venngage’s Chart Maker as desired.
Not quite your style? There’s plenty of other organizational chart templates to choose from.
Here’s an organizational chart that’s perfect for small businesses that have limited employees. One quick look, and you’re good to go.
The bottom line is, no matter how big or small your business may be, you should always revisit your organizational design to optimize your workforce management and business operations.
Related: Types of Organizational Structure [+ Visualization Tips]
In this day and age, it’s a known fact that companies must provide more than just a paycheque to attract and retain talent, and encourage growth.
It’s true — studies have shown employees are more engaged in their work when they feel it is meaningful, fulfilling and slightly challenging. So your human resource plan should consider how to inspire such feelings, and what actions you can take to motivate employees to stay. (Hint: a strong HR training and development program is key.)
The talent management infographic template below is a great way to begin.
Using this process chart , you can detail the steps you’ll take to retain the talent you have. Reference it as needed in your human resource planning.
Another great way to keep staff motivated and geared towards their professional growth is by coming up with ideas for employee development . Facilitating a company culture that champions continuous learning guarantees your team will feel supported and challenged in all the right ways.
The two employee development plan templates below will help you do just that.
Though both templates are geared towards healthcare organizations, it’s easy to customize their content in Venngage to promote the continuous learning and development of employees in any industry.
As a result, your employees will be able to reach their full potential, while simultaneously supporting the long-term goals of your organization.
Related: 6 Employee Development Ideas for Efficient Training
Let’s face it, human resources ain’t cheap.
Meaning, if you struggle at organizing and monitoring your HR budget, you’re bound to overspend on your initiatives —and no financially savvy business wants that.
That’s why I recommend including financial information in your HR planning process, so you can reference your budget and expenses as needed. This ensures you’ll be able to stay within range as you work towards achieving your strategic goals for human capital .
Plus, you don’t need to use one that contains walls of text and wack-loads numbers. Check out the clean and cheery option below — it’s as easy to fill out as it is to understand.
And if you’re looking to compare a forecasted budget to previous annual spending when strategizing your HR budget, the Budget Comparison Infographic Template below will help.
The bar graph is a great data visualization of annual expenses, organized by category. Just add (or import) any values to Venngage’s editor, swap out the text, and you’re ready to compare with ease.
Related: 10+ Expense Report Templates You Can Edit Easily
Measurable results are important when it comes to your HR planning processes, because they indicate whether your strategy is working or not.
Keeping those metrics in mind, your company can make adjustments and improve upon any future plans — AKA strategize for future success in business. That’s why your human resource plan should include info re: the specific key performance indicators (KPI) you’ll be measuring.
KPIs are established to help determine if HR strategies and plans are working. Much like those used for evaluating the performance of marketing or sales plan , KPIs for human resources are measurable results that indicate an organization’s success at achieving predetermined goals.
These may take the form of headcounts, turnover rates, demographic information, time to hire and employee satisfaction scores.
Here’s one employee satisfaction survey you can use to understand your workforce better.
When you’re ready to organize those HR KPIs in a document, the recruiting template below is perfect for keeping tabs at a glance.
Related: 10+ Customizable HR Report Templates & Examples
How do I make an HR plan?
After you’ve collected the data you need, you’ll want to convey this info in an engaging, professional manner for easy referencing and sharing amongst colleagues. Given this, using Venngage is the best route to go.
Here are the simple steps to help you bring an actionable HR plan to life:
- Outline the information you would like to include in your strategic hr plan
- Pick the human resource planning templates that best suits your needs
- Customize the templates’ text and visual assets so they speak to your organization
- Apply your company’s brand guidelines with a few clicks using Venngage’s automated branding feature, My Brand Kit
- Download and share as desired
Note: sharing is available free-of-charge. However, the option to download your creations and access features like My Brand Kit and Team Collaboration are available with a Business plan .
FAQ about HR plans
How long should an hr plan be .
There are no hard and fast rules when it comes to the length of an HR plan. That being said, if you’re going to share it with colleagues, you probably don’t want to create a 20+ page document. One to five pages should suffice.
Try to be as concise as possible when relaying the facts, and use data visualizations wherever possible to save room.
Do I need an HR contingency plan?
In the same way creating an HR plan is a proactive move that helps your organization account for future needs, it’s a good idea to devise an HR contingency plan. This ensures there’s a back-up plan in place should your initiatives not go as expected.
For example, if you’ve identified that you need five new hires to keep up with consumer demand, but the talent pool is lacking, a contingency plan could house suggestions for restructuring your workforce to mitigate this.
In other words, it’s best-practice to hope for the best, but prepare for the worst.
Is an HR plan different from an employee development plan?
Yes. While an HR plan is a strategic document describing how an organization addresses its personnel-related needs at a high-level, an employee development plan outlines the processes needed to help an individual achieve their professional goals.
Even though the human resource planning process may involve outlining some employee development tactics, it is not unique to each employee as in the case of an employee development plan.
Make your HR planning processes effortless
You don’t need a crystal ball to feel confident about your people moving forward. With a solid HR plan and strategy in place, you’ll prime your workforce — and all business endeavors — to succeed in even the most competitive of markets.
Just remember this: human resources planning, and creating strategic business plans in general, doesn’t have to be exhausting.
With Venngage’s huge selection of professionally-designed templates and easy-to-use editor, all it takes is a few minutes to produce a polished document perfect for all your needs. Sign up for free today !
4 steps to strategic human resource planning
Reading time: about 7 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.
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
After determining your company’s staffing needs by assessing your current HR capacity and forecasting supply and demand, it’s time to begin the process of developing and adding talent. Talent development is a crucial part of the strategic human resources management process.
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.
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.
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How to Build a Recruitment Process
How to Write a Strategic Human Resources Plan
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How to Create a Human Resource Department Annual Strategic Plan
Three key elements of the human resources planning model, ratio analysis formulas used in human resources.
- Role of HR in a Small Software Company
- How to Develop a Staffing Plan for a Business Organization
A strategic plan serves as a road map for an organization in terms of its vision, mission statement, core values, objectives and goals. It gives functional areas such as distribution, manufacturing, marketing, finance, operations, research and development and human resources a framework for contributing to goal achievement. It is within this framework that human resources must develop a strategic plan for what the authors of “Successful Strategic Human Resource Planning” call “people management” to ensure workforce availability, competency and competitiveness.
The planning process becomes smoother with preparation. During this preliminary “plan-to-plan” stage, individuals who will be involved, the project’s time frame, information needed and sources for that information are identified. Odds for success increase by devoting time to ensure that no one (customers, investors and employees) and nothing has been overlooked. Small businesses may opt to base their HR plan on a set number of quarters or on a half-year basis depending on growth projections and whether they are in the start-up stage.
Situation Analysis
The first step in writing a strategic human resource plan involves a thorough study of external factors affecting the business: economic conditions, political/legislative atmosphere, competitive climate, market conditions, industry outlook and trends in technology. This “environmental scanning” identifies threats the organization faces and opportunities to exploit.
Internal Analysis
The internal analysis centers on corporate culture, employee competencies and workforce composition by location in terms of workers with general knowledge versus specific skills, contract labor and what author and professor emeritus George W. Bohlander calls “alliance/partners” — those whose skills do not relate directly to the organization’s strategy. Taking stock of the human capital currently employed provides a foundation for determining future staffing needs.
Forecasting Demand
Forecasting encompasses labor demand and supply predictions to indicate any surplus or shortage that the HR strategic plan must address. Demand estimates must consider the organization’s objectives, business unit goals, budgets and historic turnover, absenteeism, retirement and attrition rates. A small business likely will use the qualitative method to forecast demand when it has little or no historical data, rather than crunch statistics. The qualitative method takes advantage of management expertise, intuition and prior experience to assess future employment needs.
Forecasting Supply
Supply estimates are based on labor market characteristics such as unemployment rate, demographic trends, government regulations, education levels and worker mobility. Small businesses should consult local, state and government agencies as sources if national and international data is not relevant to their situation.
Action Plans
The final step in writing a strategic human resources plan compares the current workforce inventory with the labor forecasts. Gaps related to skills, position types (e.g., managers, specialists, plant workers) and workforce size are addressed with action plans based on organizational structure, employee development, succession planning, outsourcing, recruitment and technology strategies.
- McGraw-Hill Management Tutor Series: Stages of the Strategic HRM Planning Process
- McGraw-Hill: “Strategic Planning for Human Resources;” Julie Bulmash et al.
- Google Books: “Managing Human Resources” 14th Edition; George W. Bohlander et al.
- HR Management: How Can HR Executives Better Align Their Efforts with Corporate Strategy?
- TLNT: Building a Strategic HR Plan-The Best Time You’ll Ever Invest in Your Team
Trudy Brunot began writing in 1992. Her work has appeared in "Quarterly," "Pennsylvania Health & You," "Constructor" and the "Tribune-Review" newspaper. Her domestic and international experience includes human resources, advertising, marketing, product and retail management positions. She holds a master's degree in international business administration from the University of South Carolina.
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How to write a strategic human resources plan
Success in business doesn’t just happen. It’s the result of hard work and careful planning. To achieve your business goals, your company needs a strong corporate strategy. It also needs a strategic human resource management plan.
What Happens If You Have an Ineffective Human Resources Plan
Your corporate HR strategy guides your company toward its goals. When creating a corporate strategy, it’s important to remember that this strategy will affect every aspect of your business. Here are just a few of the implications of an ineffective HR plan:
- A company depends on its employees. When things go wrong, they can go very wrong.
- Employee turnover can increase if employees become frustrated with confusing or inconsistent HR policies.
- Retention and recruitment efforts can be thwarted by dissatisfaction with employee benefits programs.
- Inadequate training and on-boarding can lead to ineffective daily processes.
- Employee litigation and reputational damage can result if HR policies allow an environment in which harassment becomes widespread or if hiring, firing and promotion decisions are interpreted as discriminatory.
On the other hand, a strategic, thoughtful HR plan can help your company avoid employee issues so your company can thrive.
Create Your Strategic HR Plan
When’s the last time you assessed your company’s HR plan? If it’s been a while – or if it’s never happened – now is the time to write a strategic human resources plan. Here are some steps to follow:
Step 1: Align Your HR Strategy with Your Corporate Strategy
Your HR strategy should power your corporate strategy, but this can’t happen if the two strategies are out of alignment.
- Concentrate on building a workforce that helps your company thrive.
- Consider your corporate goals and what will be needed in terms of human resources to reach those goals.
- Eliminate conflict and contradiction between your stated corporate goals and your day-to-day HR processes.
Step 2: Assess Your Current Strengths and Weaknesses
Before your company can improve its HR functions, it needs to conduct an honest assessment of its current capabilities.
- Are HR policies clearly understood by everyone, including management and employees?
- Does the new employee on-boarding process make it easy for recruits to understand HR policies?
- Are hiring and training processes resulting in a highly skilled workforce capable of reaching corporate goals?
- Is employee engagement and satisfaction with benefit programs as high as it should be?
- Is employee turnover higher than it should be?
- Does your company provide a positive work environment where employees feel valued?
- Is the employee handbook accurate and complete?
- Does your company support diversity and inclusion among its workforce?
- Does your company have an issue with employee litigation?
Step 3: Look Outward
Your company does not exist as an island. When creating a strategy plan for human resource management, consider the external factors that can impact your employees and inform your HR policies.
- Are you losing top talent to your competitors? If so, what are your competitors doing better than you in terms of HR?
- How does the current job market impact recruitment and retention? A tight labor pool can make finding and keeping the right talent especially difficult.
- What challenges do employees face from external sources? These could include issues with mental health, stress , physical health, financial security and childcare arrangements. These problems can make it difficult for employees to focus on their work.
Step 4: Decide How to Fill in Gaps and Meet Challenges
Every company has room for improvement. Your assessment of your company’s current HR capabilities will likely uncover gaps. Writing your strategic human resources plan requires you to determine how to fill in these gaps.
- How can you improve hiring, on-boarding, training and retention efforts?
- How can you improve employee participation in benefits programs?
- How you reduce employment liability exposures?
- How can you improve communication regarding HR-related issues?
Step 5: Look to the Future
Your company has big plans. A good HR strategy can guide your company as it grows. When writing your HR plan, don’t just focus on the present – or worse, the past. Also focus on the future.
- How will your human resource needs change as your company grows? As your company grows, you will likely need to hire more workers. Consider how you will find and train the workforce you will need in the future.
- How will you control costs and manage resources as your company grows? As your company grows, HR administration becomes more complicated and time-consuming, and associated costs can increase. Consider how you will manage the costs and administrative burden.
- What external challenges are likely to occur in the future? Outside factors could include a growing or shrinking talent pool, a demand for different benefits and the relocation of the workforce away from urban centers. Consider how your HR plan will need to adjust to these and other changes.
Step 6: Implement Your Plan
Once you have a clear plan ironed out, it’s time to implement it.
- How will you implement the human resources plan? Consider the practical issues involved in the actual implementation.
- What resources will be needed to aid in implementation? This could include funds as well as technological upgrades, outside services and other resources.
- Who will be in charge of implementation? Identify the individuals who will play key roles, including HR team members and managers.
- What is your expected timeline for implementation? How long should it take? What will the various phases of implementation be?
- How will changes be communicated to managers and employees to ease the transition? Change can be difficult and confusing, but solid communication can help.
Step 7: Reassess and Update
After implementation, it will be necessary to review the HR plan and tweak it as necessary. This may be done on a regular schedule. Reviews may also occur after significant events that impact HR functions, such as crises, growth and mergers.
- What is working well? What has contributed to the success? Identify what works so you can continue the policies and programs and expand upon them.
- What is not working well? What has interfered with success? Figure out what has gone wrong so you can correct policies going forward.
- What new challenges have emerged? Consider how the human resources department will need to adapt to face these challenges. What resources will be needed? What new policies or processes are necessary?
Need help developing your strategic human resources plan?
Reach out to Higginbotham’s HR Services team . We realize you only have so many hours in each day, and we’ve designed our HR consulting services to help give you some of that time back. Whether you need a hands-on partner or a specialist for occasional guidance, our services scale to meet your organization’s need and budget.
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How to Create a Human Resource Strategy
- How to Create a Human…
Posted by Erik van Vulpen
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What is a Human Resource Strategy?
- It requires an analysis of the organization and the external environment.
- It takes longer than one year to implement.
- It shapes the character and direction of Human Resources Management activities
- Helps in the deployment and allocation of organizational resources (i.e. money, time, personnel)
- Is revised on a yearly basis.
- It incorporates the expert judgment of senior (HR) management.
- It is number-driven.
- It results in a specific behavior.
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6 HR strategy best practices
- HR professionals should know the strategy and (at least to some extent) be involved in its creation – A strategy will only be effective if it is clearly communicated. Involvement in the creation of the strategy will help in the communication and create buy-in.
- Management buy-in and HR budget are critical enablers of strategy execution – An HR strategy can never be realized in isolation. Conditions are management buy-in, budget, skilled HR professionals, and appropriate digital technology.
- HR initiatives should be aligned with the HR strategy – The strategy is there for a reason: it should be followed. HR practices and initiatives should follow the strategy.
- Performance incentives should be directly connected with the execution of the strategy – The idea of contingent compensation is as old as HR itself. People will work harder if their goals and incentives are aligned.
- Strategies should be monitored and execution measured through KPIs – Strategy will never be effective without consistent implementation and monitoring of results. This is done through KPIs (metrics that measure strategic goals)
- Strategy is a long-term plan – A strategy is, by definition, long-term. This doesn’t mean it isn’t subject to change. A strategy can be – and sometimes should be – adapted to better fit the external environment.
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Strategic HR Planning
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Strategic HR planning links HR management directly to the strategic plan of your organization.
Most mid- to large-sized organizations have a strategic plan that guides them in successfully meeting their missions. Organizations routinely complete financial plans to ensure they achieve organizational goals. While workforce plans are not as common, they are just as important.
Even a small organization can develop a strategic plan to guide decisions about the future. Based on its overall strategic plan, your organization can develop a strategic HR plan that will allow you to make HR management decisions now to support the future direction of the organization. Strategic HR planning is also important from a budgetary point of view so that you can factor costs such as recruitment and training into your organization's operating budget.
Strategic HR management is defined as integrating human resource management strategies and systems to achieve the overall mission, strategies and success of the firm while meeting the needs of employees and other stakeholders. (Source: Herman Schwind, Hari Das and Terry Wagar, Human Resource Management: A Strategic Approach.)
Part of strategic planning is defining your organization's mission, vision and values. Andrew Fleck Child Care Services has provided their Mission, Vision and Values as an example:
Mission – We support children and their families through high quality, inclusive services that meet their diverse developmental, early learning and child care needs
Vision – Working with the Ottawa community to build accessible multi-service support, early learning opportunities and child care for every child
- Accountability
- Responsiveness
- Inclusiveness
Your strategic HR plan should be aligned with your Mission, Vision and Values.
In this section:
- Introduction to Strategic HR Planning
- The Strategic HR Management Planning Process
- Documenting the Strategic HR Plan
- Implementing the Strategic HR Plan
Introduction to strategic HR planning
The overall purpose of strategic hr planning is to:.
- Ensure adequate human resources to meet the strategic goals and operational plans of your organization – the right people with the right skills at the right time
- Keep up with social, economic, legislative and technological trends that impact on human resources in your area and in the sector
- Remain flexible so that your organization can manage change if the future is different than anticipated
Strategic HR planning predicts the future HR needs of the organization after analyzing the organization's current human resources, the external labour market and the future HR environment that the organization will be operating in. The analysis of HR management issues external to the organization and developing scenarios about the future are what distinguishes strategic planning from operational planning.
The basic questions to be answered for strategic planning are:
- Where are we going?
- How will we develop HR strategies to successfully get there, given the circumstances?
- What skill sets do we need?
HR Management Standard 6.1 The organization has a process to review staffing needs resulting in a plan to address those needs.
The strategic HR management planning process
The strategic HR management planning process has four steps: Assessing the current HR capacity Forecasting HR requirements Gap analysis Developing HR strategies to support organizational strategies
1. Assessing the current HR capacity
Based on the organization's strategic plan, the first step in the strategic HR planning process is to assess the current HR capacity of the organization. The knowledge, skills and abilities of your current staff need to be identified. This can be done by developing a skills inventory for each employee.
The skills inventory should go beyond the skills needed for the particular position. List all skills each employee has demonstrated. For example, recreational or volunteer activities may involve special skills that could be relevant to the organization. Education levels and certificates or additional training should also be included.
An employee's performance assessment form can be reviewed to determine if the person is ready and willing to take on more responsibility and to look at the employee's current development plans.
2. Forecasting HR requirements
The next step is to forecast HR needs for the future based on the strategic goals of the organization. Realistic forecasting of human resources involves estimating both demand and supply.
Questions to be answered include:
- How many staff will be required to achieve the strategic goals of the organization?
- What jobs will need to be filled?
- What skill sets will people need?
When forecasting demands for HR, you must also assess the challenges that you will have in meeting your staffing need based on the external environment.
- How will the external environment impact our HR needs?
3. Gap analysis
The next step is to determine the gap between where your organization wants to be in the future and where you are now. The gap analysis includes identifying the number of staff and the skills and abilities required in the future in comparison to the current situation. You should also look at all your organization's HR management practices to identify those that could be improved or new practices needed to support the organization's capacity to move forward.
- What new jobs will we need?
- What new skills will be required?
- Do our present employees have the required skills?
- Are employees currently in positions that use their strengths?
- Do we have enough managers/supervisors?
- Are current HR management practices adequate for future needs?
4. Developing HR strategies to support organizational strategies
There are five HR strategies for meeting your organization's future needs: Training and development strategies Recruitment strategies Outsourcing strategies Collaboration strategies Restructuring strategies
1. Training and development strategies
These strategies include:.
- Providing staff with training to take on new roles
- Providing current staff with development opportunities to prepare them for future jobs in your organization
Training and development needs can be met in a variety of ways. One approach is for the employer to pay for employees to upgrade their skills. This may involve sending the employee to take courses or certificates, or it may be accomplished through on-the-job training. Many training and development needs can be met through cost effective techniques.
2. Recruitment strategies
- Recruiting new staff with the skill and abilities that your organization will need in the future
- Considering all the available options for strategically promoting job openings and encouraging suitable candidates to apply
Each time you recruit you should be looking at the requirements from a strategic perspective. For example, if your organization has several supervisors that are nearing retirement age, your recruitment strategy should include recruiting staff with the ability to assume a supervisory role in the near future.
3. Outsourcing strategies
- Using external individuals or organizations to complete some tasks
Many organizations look outside their own staff pool and contract for certain skills. This is particularly helpful for accomplishing specific, specialized tasks that don't require ongoing full-time work.
Some organizations outsource HR activities, project work or bookkeeping. For example, payroll may be done by an external organization rather than a staff person, a short-term project may be done using a consultant, or specific expertise such as legal advice may be purchased from an outside source.
When deciding to outsource to an individual, ensure you are not mistakenly calling an employee a consultant. This is illegal and can have serious financial implications for your organization. To understand the differences between employees and self-employed people, visit the Canada Revenue Agency's website .
Each outsourcing decision has implications for meeting the organization's goals and should therefore be carefully assessed.
4. Collaboration strategies
The strategic HR planning process may lead to indirect strategies that go beyond your organization. By collaborating with other organizations you may have better success at dealing with a shortage of certain skills.
Examples of collaboration include:
- Working together to influence the types of courses offered by educational institutions
- Working with other organizations to prepare future leaders by sharing in the development of promising individuals
- Sharing the costs of training for groups of employees
- Allowing employees to visit other organizations to gain skills and insight
5. Restructuring strategies
If your assessment indicates that there is an oversupply of skills, there are a variety of options open to assist in the adjustment.
- Reducing staff either by termination or attrition
- Regrouping tasks to create well designed jobs
- Reorganizing work units to be more efficient
Termination of workers gives immediate results. Generally, there will be costs associated with this approach depending on your employment agreements. Notice periods are guaranteed in all provinces. Be sure to review the Employment and Labour Standards in your province or territory to ensure that you are compliant with the legislation.
Termination packages are governed by case law as well as by employment standards legislation (which only states the bare minimum to be paid). Consult with a lawyer to determine the best approach to termination packages.
Attrition – not replacing employees when they leave – is another way to reduce staff. The viability of this option depends on how urgently you need to reduce staff. It will mean that jobs performed in the organization will have to be reorganized so that essential work of the departing employee is covered. Careful assessment of the reorganized workloads of remaining employees should include an analysis of whether or not their new workloads will result in improved outcomes.
It is important to consider current labour market trends (e.g., the looming skills shortage as baby boomers begin to retire) because there may be longer-term consequences if you let staff go.
Sometimes existing workers may be willing to voluntarily reduce their hours, especially if the situation is temporary. Job sharing may be another option. The key to success is to ensure that employees are satisfied with the arrangement, that they confirm agreement to the new arrangement in writing, and that it meets the needs of the employer. Excellent communication is a prerequisite for success.
Your analysis may tell you that your organization may have more resources in some areas than others. This calls for a redeployment of workers to the area of shortage. The training needs of the transferred workers need to be taken into account.
Documenting the strategic HR plan
Once the strategies for HR in your organization have been developed they should be documented in an HR plan. This is a brief document that states the key assumptions and the resulting strategies along with who has responsibility for the strategies and the timelines for implementation.
Implementing the strategic HR plan
Once the HR strategic plan is complete the next step is to implement it.
Agreement with the plan
Ensure that the board chair, executive director and senior managers agree with the strategic HR plan. It may seem like a redundant step if everyone has been involved all the way along, but it's always good to get final confirmation.
Communication
The strategic hr plan needs to be communicated throughout the organization. your communication should include:.
- How the plan ties to the organization's overall strategic plan
- What changes in HR management policies, practices and activities will be made to support the strategic plan
- How any changes in HR management will impact on staff, including a timeframe if appropriate
- How each staff member can contribute to the plan
- How staff will be supported through any changes
- How the organization will be different in the future
It is impossible to communicate too much (but all too easy to communicate too little), especially when changes involve people. However, the amount of detail should vary depending upon the audience.
Legislation and mandate
Ensure that the actions you are considering are compliant with existing laws, regulations and the constitution and bylaws of your organization.
To review laws relating to employment, visit the HR Toolkit section on Employment Legislation and Standards .
Organizational needs
Whether you are increasing or reducing the number of employees, there are implications for space and equipment, as well as existing resources such as payroll and benefit plans.
HR plans need to be updated on a regular basis. You will need to establish the information necessary to evaluate the success of the new plan. Benchmarks need to be selected and measured over time to determine if the plan is successful in achieving the desired objectives.
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IMAGES
VIDEO
COMMENTS
How to create a human resource strategy · Understand the business and its objectives · Evaluate employee skillsets · Conduct a gap analysis · Assess talent strategy
How do you create a Strategic HR Plan? · Step 1: Identify Future HR Needs · Step 2: Consider Present HR Capabilities · Step 3: Identify Gaps
Benefits to HR to engage in strategic planning. · Developing a strategic HR plan. · Assessing the organization's current environment. · Creating statements of
Assess employees' current skill levels · Forecast your labor needs based on available information · Revisit your organizational design · Outline
4 steps to strategic human resources planning. Assess current HR capacity; Forecast HR requirements; Develop talent strategies; Review and evaluate. It's easy
How to Write a Strategic Human Resources Plan · Pre-plan. The planning process becomes smoother with preparation. · Situation Analysis · Internal Analysis.
Create Your Strategic HR Plan · Step 1: Align Your HR Strategy with Your Corporate Strategy · Step 2: Assess Your Current Strengths and Weaknesses.
6 HR strategy best practices · HR professionals should know the strategy and (at least to some extent) be involved in its creation · Management buy-in and HR
HR strategic planning - it's not easy! Especially given the events, uncertainty and turmoil of the last two years...how should you even
How the plan ties to the organization's overall strategic plan · What changes in HR management policies, practices and activities will be made to support the