STRATEGIC HR

Strategy connects the purpose and values of your organization with those of its customers and other external shareholders.

— Tony Manning, Making Sense of Strategy

If you don't know where you're going, how will you know when you get there? That's why every organization needs a strategy for planning its future, and HR is a big part of that planning process.

Organizational strategy

Managers are responsible for allocating resources to achieve their organization's stated goals, and this is where organizational strategy comes into play. Successful management of resources depends on effective planning. Managers need to set the organization's strategic direction and develop a plan to implement the strategy.

That plan defines the organization's path into the future, and implementing it involves making decisions about the allocation of resources to reach the goals.

Organizational resources include intellectual capital, products, and financial capital, but the most important resource is human capital — the people who make it all happen. And because most organizations spend the largest percentage of their dollars on their labor force, firms that align their people strategies with their organizational strategies are the most successful.

The strategic planning process begins by determining what the organization wants to achieve throughout a reasonable period of time. In the past, standard business practice was to plan for long periods, such as five, ten, or twenty years — but in today's volatile business climate, most organizations plan for shorter periods such as one, three, or at most, five years.

For your organization to remain competitive, it is essential to revisit your strategic plan frequently, and explore the business climate in your organization's field to understand changes that may affect your organization and its strategy. Strategy development involves evaluating the organization's current business situation and determining where it wants to go in the future. Managing strategy is never "cast in concrete" — it is a continuous, recurring process.

Developing a strategic plan

The most enlightened organizations include human resources (HR) in the development of the strategic plan, so that the human resources plan can link directly to the strategic plan (discussed later in this chapter).

The typical approach to strategic planning is a three-step process:

1. Establish why the organization exists, its mission.

2. Define what you want the organization's near future to be.

3. Establish what needs to be done — and what needs to be done differently — to reach the stated objectives.

Crafting a mission statement

Organizational strategy consists of concisely, clearly, and carefully communicating to everyone in the organization where the organization is headed, which is the first step in creating a mission statement. This document describes what the organization is today, and what it values, in succinct and measurable terms. Mission statements are shared with employees, clients, and customers.

When you're developing a strategic plan, start by asking a series of questions that will produce the information you need to take the next step in defining the organization's future direction. Here are some sample questions:

[??] What are your plans for growth?

[??] What is your ethics statement?

[??] What challenges are you facing today?

[??] What are your competitors doing that you aren't doing?

[??] What sets you apart from the competition?

[??] What changes have occurred in your industry or service area?

[??] How has globalization affected your organization?

[??] Have your competitors entered the global market?

[??] Are there opportunities outside your current market to consider?

[??] Is your technology up to date?

[??] What effect has technology had on your customers, members, or employees?

[??] Have your customers' or members' expectations changed?

[??] What are you doing to retain any competitive advantage you have?

[??] What are your distinctive competitive strengths, and how does the plan build on them?

[??] How will changes in your strategy affect your employees?

[??] Do you have the people resources you need to reach your desired goals?

[??] What effect will the changing demographics have on your strategy?

[??] What legal or regulatory changes do you anticipate that may affect your strategy?

[??] How and why is this plan different from the previous one? Were all your previous elements completed? If not, why? What could you have done to complete that element?

[??] How different is your strategy from those of your competitors, and why? Is that good or bad? What do you know about your competitors' strategies?

[??] How accurate have your past budgets and projections been? What could have made them more accurate and how will you modify your budgeting process, if needed?

[??] Who will measure the outcomes of the strategy, and with what tools? How often will you monitor progress?

After answering these questions, you can determine how the organization will capitalize on its strengths, eliminate or minimize its weaknesses, exploit opportunities, and defend against threats. This is called a SWOT analysis (strengths, weaknesses, opportunities, and threats) and should be something you do annually.

Putting your strategic plan in motion

If the organization sets out a good strategic direction and sets goals and measurements to ensure the goals are met, it can envision its future.

But after the vision is set forth, nothing will happen without an implementation strategy. This is where responsibilities are determined and accountabilities defined. A timeline should be created, and milestone reviews should be scheduled, so that the strategic plan is constantly in front of the leadership and discussed at staff meetings. The timeline should be reviewed and updated in order to keep it as current as possible.

Communicating the plan

Once the strategic plan is developed and easily understood, it is extremely important to share it with the employees. This can be in writing, sent as an email from the leader of the organization, or communicated in person at an "all staff" meeting. How the message gets out isn't nearly as important as the fact that it is communicated. Employees need to know where their organization is headed, and how the work they do fits into the plan; this is especially important for your Millennial employees. They will leave if it's not readily apparent...