Strategic HR management
Strategic HR planning has been identified as a key working document and initiative that is to be developed and expanded upon as an outcome of Grow Management Consultants Business Plan.
This links HR management directly to the Business Plan and the strategic direction that has been chosen by Grow Management Consultants. Most mid- to large sized organisations have a strategic plan that guides them in successfully meeting their missions. Organisations routinely complete financial plans to ensure they achieve organisational goals and while HR workforce plans are not as common, they are just as important.
Even a small organisation like Grow Management Consultants needs a business plan to guide decisions about the future. Based on the business plan, Grow Management Consultants can develop a strategic HR plan that will allow them to make HR management decisions now to support the future direction of Grow Management Consultants. Strategic HR planning is also important from a budgetary point of view so that you can factor the costs of recruitment, training, unacceptable staff turnover, moral, culture, etc. into Grow Management Consultant’s operating budget.
Strategic HR management could be defined as:
Integrating human resource management strategies and systems to achieve the overall mission, strategies, and success of Grow Management Consultants while meeting the needs of employees and other stakeholders.
The overall purpose of strategic HR planning is to:
- Ensure adequate human resources to meet the strategic goals and operational plans of Grow Management Consultants; 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 Grow Management Consultants can manage change if the future is different than anticipated
HR planning predicts the future HR management needs after analysing current resources, the external labour market and the future HR environment that Grow Management Consultants will be operating in. The analysis of HR management issues external to the organisation 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?
The strategic HR planning process
The strategic HR planning process has four steps:
- Assessing the current HR capacity
- Forecasting HR requirements
- Gap analysis
- Developing HR strategies to support Grow Management Consultants strategies
Assessing current HR capacity
Based on the Grow Management Consultants business plan, the first step in the strategic HR planning process is to assess the current HR capacity of Grow Management Consultants. Currently the organisation has a total of 29 staff divided in 4 departments. Grow Management Consultants currently delivers to its forecast within the staff capacity however due to the recent trend of reduction in profit Grow Management Consultants will have a 6 monthly Appraisal of each department to ensure that the roles need number of Staff compared to the output.
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. Grow Management Consultants will conduct appraisal on the knowledge base of each staff accordingly and arrange continuous training and professional development to ensure all staff are up to date with industry requirements ensure staff revaluate their own skillset and can request additional training during their appraisal.
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 Grow Management Consultants. 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.
Forecasting HR requirements
The next step is to forecast HR needs for the future based on the strategic goals of Grow Management Consultants. Realistic forecasting of human resources involves estimating both demand and supply. Questions to be answered include:
- Grow Management Consultants will use The Bottom – Up and Top – Down Approach.
The Bottom – Up Approach: line mangers send their departmental requirement of human resources to the HR manager. The HR manager ultimately forecasts the human resource requirement for the overall organisation on the basis of proposals of departmental heads.
The Top – Down Approach: The CEO forecasts the human resources in consultation with the HR manager, the requirement for the entire organisation and various departments. This information is supplied to various departmental heads for their review and approval.
- Ratio Trend Analysis
Demand for manpower and human resources will be estimated on the basis of ratio of production level and number of workers available in order to determine what future man power may be required in the short or long term.
Current sustainable ratios are as followed:
1:5 Ratio: One (1) FT consultant staff member, to approx. five (5) clients
1:5 Ratio: One (1) FT administration staff member, to approx. five (5) consultant staff members
- Other Factor to be considered when preparing the HR forecast:
- How many staff will be required to achieve the strategic goals of Grow Management Consultants?
- What jobs will need to be filled?
- What skill sets will people need?
In Addition, when forecasting demands for HR, Grow Management Consultants will also assess the challenges that it will have in meeting the staffing need based on the external environment. To determine external impacts, you may want to consider some of the following factors:
- How does the current economy affect our work and our ability to attract new employees?
- How do current technological or cultural shifts impact the way we work and the skilled labour we require?
- What changes are occurring in the Australian labour market?
- How is our community is changing or expected to change in the near future?
The next step is to determine the gap between where Grow Management Consultants 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 Grow Management Consultant’s HR management practices to identify practices that could be improved or new practices needed to support Grow Management Consultant’s capacity to move forward. Key issues to be addressed by Grow Management Consultants are:
- 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?
- Are current HR management practices adequate for future needs?
Immediate issues identified from Grow Management Consultants Gap analysis
The following issues have been identified by management as requiring immediate action and are to be included in the operational plan.
- Operational objective: Reduce staff turnover
Human resources requirement: Complete analysis as to why the turnover is so high, provide a report on findings and recommended action plan, to reduce annual turnover to a target of 10% pa.
- Operational objective: Grow Management Consultants does not have a performance management system
Human resources requirement: Prepare and present for management approval a comprehensive performance management system, including but not limited to KPI’s, feedback, training of management, formal assessments and warnings, compliance with legislation.
The report also needs to identify alignment with Grow Management Consultant’s strategic objectives.
- Operational objective: Need to develop digital capability, covering SEO ranking, digital advertising, social media and Web page ownership
Human resources requirement: Prepare position description for approval, advertise role and interview and select suitable candidate.
Developing HR strategies to support Grow Management Consultants strategies
There are five (5) HR strategies that can be used or implemented in meeting Grow Management Consultant’s needs in the future:
- Restructuring strategies
- Training and development strategies
- Recruitment strategies
- Outsourcing strategies
- Collaboration strategies
1. Restructuring strategies
This strategy includes:
- Reducing staff either by termination or attrition
- Regrouping tasks to create well designed jobs
- Reorganising work units to be more efficient
If your assessment indicates that there is an oversupply of skills, there are a variety of options open to assist in the adjustment. Termination of workers gives immediate results. Generally, there will be costs associated with this approach depending on your employment agreements and legislation requirements.
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 organisation will have to be reorganised so that essential work of the departing employee is covered. Careful assessment of the reorganised workloads of remaining employees should include an analysis of whether or not their new workloads will result in improved outcomes.
2. Training and development strategies
This strategy includes:
- Providing staff with training to take on new roles
- Providing current staff with development opportunities to prepare them for future jobs in your organisation
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.
3. Recruitment strategies
This strategy includes:
- Recruiting new staff with the skill and abilities that your organisation will need in the future
- Considering all the available options for strategically promoting job openings and encouraging suitable candidates to apply
For strategic HR planning, each time you recruit you should be looking at the requirements from a strategic perspective.
4. Outsourcing strategies
This strategy includes:
- Using external individuals or organisations to complete some tasks
Many organisations look outside their own staff pool and contract for certain skills. This is particularly helpful for accomplishing specific, specialised tasks that don’t require ongoing full-time work.
Some organisations outsource HR activities, project work or bookkeeping. For example, payroll may be done by an external organisation rather than a staff person, a short-term project may be done using a consultant, or specific expertise such as legal advice may be purchase from an outside source.
When deciding to outsource to an individual, alignment with Grow Management Consultant’s strategic objectives must be considered. A part time contractor can quickly become an expensive full time resource as they fill a vacant role that should have been resourced properly in the first place.
5. Collaboration strategies
Finally, the strategic HR planning process may lead to indirect strategies that go beyond Grow Management Consultants. By collaborating with other organisations, you may have better success at dealing with a shortage of certain skills.
Types of collaboration could include:
- Working together to influence the types of courses offered by educational institutions
- Working with other organisations 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 organisations to gain skills and insight
The strategic HR plan needs to be communicated throughout the organisation. Your communication should include:
- How the plan ties to the Grow Management Consultant’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 individual member of staff can contribute to the plan
- How staff will be supported through any changes
- How the Grow Management Consultants will be different in the future
7. Operational HR Planning
All organisations engage in HR planning at an operational level – even those that do not have a strategic plan. At the operational level, good HR planning is in part based on thinking ahead about the organisation.
At an operational level, organisations put HR management practices in place to support management and staff in achieving their day-to-day goals. Whether it’s determining how many staff are needed to deliver services over the next year or how performance will be monitored, HR management practices and activities need to be planned to answer the question: “Where is our organisation going and how will it get there?”