the link between business planning and human resources

How Is Human Resource Planning Integrated With Strategic Planning?

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Alignment of Strategies

Transformational strategy, operational strategy problems.

• About Strategic HR: Theory & Principles
• List of HRM Competencies

All businesses, no matter how small, have three categories of resources available to them: the technology they use to create a product or service; the finance they use to operate and grow the business, and the people whose talents they use to accomplish the company's goals.

Strategic planning is the process of figuring out why the organization is in business and what long-term goals it wants to achieve with its available resources. Human talent is one of those resources, so there's a direct link between strategic and human resources planning – neither one can exist without the other.

What Is Strategic Planning?

The purpose of strategic planning is out figure out what a company wants to do and why it is in business. For example, an organization might decide that it wants to diversify into new markets because it has gone as far as it can go in its current markets. The strategic options here include:

• Developing new products to sell to its existing customers.
• Selling the same products to a completely new group of customers, such as people in a different country.
• Buying a company that operates a different business model that may or may not complement the company's business model.

The process of strategic planning would involve investigating all of these options and deciding which one represents the company's vision of the future. From there, the company's leadership team would start drilling down into the specific strategies that can enable the company to meet its big-picture goals.

What Is the Strategic Planning Process?

Businesses typically look three to five years ahead when formulating a strategic plan, and the process results in a document that articulates the company's vision, mission, big-picture goals and the broad strategies it will use to reach those goals. This planning document is intended to guide leadership in its decision-making.

A key part of strategic planning is assessing the company's resources. It's easy for any company to dream big and have stratospheric ambitions, but what the company can realistically achieve is limited by the number and type of resources it has at its disposal. For most businesses, those resources fall into three main categories:

Technology resources : This includes all the equipment, processes and infrastructure the business uses to create the products and services that it brings to market.

Financial resources : Finance comprises all the liquid resources the company can use to carry out its business operations – namely cash in hand, short-term and long-term bank deposits, liquid financial investments like stocks and bonds, and approved bank loans.

Human resources : This resource comprises the people whose talents, skills and personal characteristics the business can use to accomplish its strategic goals. While technology and money are important assets, human resources are the most important, because technology and money need people to manage them.

As you can see, human resources are an integral part of any strategic plan. If the business does not have the right skills and talent in place to achieve its goals, then the strategic plan will fail due to a lack of knowledge and manpower. Similarly, if talent is acquired and deployed without reference to the company's strategic goals, then you're going to end up with a lot of people doing jobs that don't add value to the business, and which don't move the company closer to where it wants to be.

What Is Human Resource Strategic Planning?

The purpose of human resource planning is look into the future and decide what skills, knowledge and competencies the business is going to need in one, three or five years' time to meet its strategic goals. For example, if the company is currently outsourcing its marketing function but intends to bring this function in-house, then an obvious early strategy is to recruit a full marketing team, from a senior manager all the way down to a junior marketing associate or intern.

Whatever the mission of the business, one of the major objectives of human resource planning is to dig into the talent pipeline and answer the following questions:

• How can the business attract the right type of people in the right numbers?
• What kind of training and development can it offer to its current employees, to close any knowledge gaps?
• How can it balance projected labor demand with supply so there is no labor surplus or understaffing?
• Who are its key people, and how can it incentivize them to stay?

Answering these questions ensures the business has the right people in the right numbers in the right job roles to ensure the company's profitability.

What Is the Relationship Between Human Resource Planning and Business Strategy?

Strategic planning and human resources planning basically have a symbiotic relationship, in that each function is dependent on the other. Here are some examples of how the relationship works in practice:

Impact assessments

When leaders start developing a strategic plan, they will liaise with different department heads to see how the proposed business strategies might affect them. The human resources planning team will figure out the financial impact of the initiative based on the recruiting, training and retention strategies that may be necessary to support the plan. If the initiative involves downsizing, for example, then human resources managers must look at the various options for decreasing the labor supply through dismissals, retirements, transfers out of the department, sabbaticals and voluntary quitting.

Invariably, there will be a time cost associated with a new initiative. It's up to HR to feedback how long it will take to hire or upskill permanent staff members and whether the company can work with contractors in the interim. This helps senior leaders develop a timescale for the new initiative.

Executing the plan

As soon as a strategic initiative receives the green light, the human resources team must ready the company's employees for the changes that are about to ensue. This might include changing people's job descriptions, moving people between job units, policy making, motivation strategies, developing training programs, and pinpointing and eliminating labor shortages through recruitment and outsourcing.

Feedback and monitoring

Once the strategic initiative is implemented, HR will monitor the changes that are being made to the workforce to establish whether the policies are sufficient , affordable and sustainable . Because the strategic plan is a long-term plan, it is crucial for the business to keep monitoring its talent pipeline, and keep updating its demand forecast, to ensure that the business always has the right people in place to meet its objectives.

Which Comes First, the Chicken or the Egg?

Because strategic planning and HR planning are interdependent, it really doesn't matter which plan the leadership team begins to develop first. In fact, they probably should be developed in conjunction with each other. That's because the strategic plan cannot be finalized until there are supporting talent strategies in place from human resources, and the human resources plan cannot be finalized until the long-term goals of the company are clear.

The most effective organizations are those that achieve alignment between the technology, finance and human resources of the business and the formulation and implementation stages of the strategic plan. It should be an integrative activity, rather than a leader-follower process.

• Investopedia: Human Resources Planning
• Clearpoint Strategy: Strategic Planning
• HRM Practice: Linking Organizational Strategy to Human Resource Planning
• Fast Company: Four Reasons To Invite HR To Your Strategic Planning Meetings

Jayne Thompson earned an LLB in Law and Business Administration from the University of Birmingham and an LLM in International Law from the University of East London. She practiced in various “big law” firms before launching a career as a business writer. Her articles have appeared on numerous business sites including Typefinder, Women in Business, Startwire and Indeed.com. Find her at www.whiterosecopywriting.com.

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The new possible: How HR can help build the organization of the future

Business leaders watching their organizations experience profound upheaval because of the COVID-19 crisis may find it difficult to understand what it all means until the dust settles.

But the pandemic hasn’t afforded them, or any of us, that luxury. It has created profound and immediate changes to how societies operate and how individuals interact and work. We have all witnessed an at-scale shift to remote work, the dynamic reallocation of resources, and the acceleration of digitization and automation to meet changing individual and organizational needs.

Organizations have by and large met the challenges of this crisis moment. But as we move toward imagining a postpandemic era , a management system based on old rules—a hierarchy that solves for uniformity, bureaucracy, and control—will no longer be effective. Taking its place should be a model that is more flexible and responsive, built around four interrelated trends: more connection, unprecedented automation, lower transaction costs, and demographic shifts.

To usher in the organization of the future, chief human-resources officers (CHROs) and other leaders should do nothing less than reimagine the basic tenets of organization. Emerging models are creative, adaptable, and antifragile . 1 Nassim Nicholas Taleb, Antifragile: Things That Gain from Disorder , New York, NY: Random House Trade Paperbacks, 2012. Corporate purpose fuels bold business moves. “Labor” becomes “talent.” Hierarchies become networks of teams . Competitors become ecosystem collaborators. And companies become more human: inspiring, collaborative, and bent on creating an employee experience that is meaningful and enjoyable .

After the pandemic erupted last year, we spoke with 350 HR leaders about the role of uncertainty in their function. They told us that over the next two years they wanted to prioritize initiatives that strengthen their organization’s ability to drive change in leadership, culture, and employee experience.

How are they doing? In this article, we discuss ways that CHROs can continue to meet the moment by rethinking processes in three fundamental areas: identity, agility, and scalability.

How HR fits in the big picture

McKinsey has recently conducted research on how businesses can best organize for the future . The experimentation underway suggests that future-ready companies share three characteristics: they know what they are and what they stand for; they operate with a fixation on speed and simplicity; and they grow by scaling up their ability to learn and innovate.

HR can help propel this transformation by facilitating positive change in these three key areas, as well as with nine imperatives that radiate out from them (Exhibit 1).

Identity: HR can clarify the meaning of purpose, value, and culture

Companies that execute with purpose have greater odds of creating significant long-term value generation , which can lead to stronger financial performance, increased employee engagement, and higher customer trust.

Home in on the organization’s purpose

What is your company’s core reason for being, and where can you have a unique, positive impact on society? Now more than ever, you need good answers to those questions—purpose is not a choice but a necessity.

CHROs play a vital role in making sure the organization is living its purpose and values . HR can articulate and role-model desired individual mindsets and behaviors linked to purpose by identifying “moments that matter” in the company’s culture and translating purpose into a set of leadership and employee norms and behaviors.

For instance, commercial-vehicle manufacturer Scania holds an annual “Climate Day,” during which the company stops operations for one hour to hold sustainability training, in line with its purpose to “drive the shift toward a sustainable transport system.” 2 Scania Annual and Sustainability Report 2019 , Scania, scania.com.

HR can also ensure that clear changes are made to recruitment and capability-building processes by determining the characteristics of a “purpose driven” employee and embedding these attributes within recruitment, development, and succession planning.

HR can also incorporate purpose-driven metrics into compensation and performance decisions. Companies across industries have embarked on these metrics lately. For example, Seventh Generation, a maker of cleaning and personal-care products, recently built into its incentive system sustainability targets for the company’s entire workforce, in service of its goal of being a zero-waste company by 2025. Shell has plans to set short-term carbon-emissions targets and link executive compensation to performance against them.

Think deeply about talent

Organizations that can reallocate talent in step with their strategic plans are more than twice as likely to outperform  their peers. To link talent to value, the best talent should be shifted into critical value-driving roles. That means moving away from a traditional approach, in which critical roles and talent are interchangeable and based on hierarchy.

Getting the best people into the most important roles requires a disciplined look at where the organization really creates value and how top talent contributes . Consider Tesla’s effort to create a culture of fast-moving innovation, or Apple’s obsessive focus on user experience. These cultural priorities are at the core of these companies’ value agendas. The roles needed to turn such priorities into value are often related to R&D and filled with talented, creative people.

To enable this shift, HR should manage talent rigorously by building an analytics capability to mine data to hire, develop, and retain the best employees. HR business partners, who articulate these staffing needs to the executive management team, should consider themselves internal service providers that ensure high returns on human-capital investments. For example, to engage business leaders in a regular review of talent, they can develop semiautomated data dashboards that track the most important metrics for critical roles.

Create the best employee experience possible

Companies know that a better employee experience means a better bottom line. Successful organizations work together with their people to create personalized, authentic, and motivating experiences that tap into purpose to strengthen individual, team, and company performance.

The HR team plays a crucial role in forming employee experience. Organizations in which HR facilitates a positive employee experience are 1.3 times more likely to report organizational outperformance, McKinsey research has shown . This has become even more important throughout the pandemic, as organizations work to build team morale and positive mindsets .

HR should facilitate and coordinate employee experience. Organizations can support this by helping HR evolve, strengthening the function’s capability so that it becomes the architect of the employee experience. Airbnb, for instance, rebranded the CHRO role as global head of employee experience. PayPal focused on HR’s capability and processes to create a better experience for employees, including coaching HR professionals on measuring and understanding that experience, and using technology more effectively.

Strengthen leadership and build capacity for change

Culture is the foundation on which exceptional financial performance is built. Companies with top-quartile cultures (as measured by McKinsey’s Organizational Health Index ) post a return to shareholders 60 percent higher  than median companies and 200 percent higher than those in the bottom quartile.

Culture change should be business-led, with clear and highly visible leadership from the top, and execution should be rigorous and consistent. Companies are more than five times more likely to have a successful transformation  when leaders have role-modeled the behavior changes they were asking their employees to make.

To strengthen an organization’s identity, HR should ask the following questions:

• How can we develop an energizing sense of purpose that has a tangible impact on our strategic choices and ways of working?
• How can we identify key talent roles and focus them on creating value?
• How can we build a data-driven, systemic understanding of our organizational health?

Agility: HR’s role in flattening the organization

Organizational agility improves both company performance and employee satisfaction . HR can be instrumental in shifting an organization from a traditional hierarchy to a marketplace that provides talent and resources to a collection of empowered small teams, helping them to achieve their missions and acting as a common guiding star.

Adopt new organizational models

For instance, as a part of a multiyear agile transformation, a large European bank worked to establish an in-house agile academy led jointly by coaches and the HR function to drive capability building for the transformation.

To be successful, a transformation should touch every facet of an organization—people, process, strategy, structure, and technology. HR can help create an iterative approach by developing core elements of the people-management process, including new career paths for agile teams, revamped performance management, and capability building. It should lead by example as well, by shifting to agile “flow to work” pools  in which individuals are staffed to prioritized tasks.

Create a flexible—and magnetic—workforce

Because many roles are becoming disaggregated and fluid, work will increasingly be defined in terms of skills . The accelerating pace of technological change is widening skill gaps, making them more common and more quick to develop. To survive and deliver on their strategic objectives, all organizations will need to reskill and upskill significant portions of their workforce over the next ten years.

According to a 2018 McKinsey survey , 66 percent of executives said that “addressing potential skills gaps related to automation/digitization” within their workforces was at least a “top ten priority.” HR should help prioritize these talent shifts.

In a more recent survey McKinsey conducted with global executives  about the postpandemic workforce, more than a third of respondents said that their organizations were unprepared to address the skill gaps exacerbated by automation and digitization. The shift to digitization has accelerated during the pandemic: 85 percent of companies have picked up the pace of their digitization (including a 48 percent rise in the digitization of customer channels). In light of these trends and the need to shift skills, there is a clear business rationale behind workforce strategy and planning.

HR should be a strategic partner for the business in this regard, by ensuring that the right talent is in place to deliver on core company objectives. HR can also drive workforce planning by reviewing how disruptive trends affect employees, identifying future core capabilities, and assessing how supply and demand apply to future skills gaps.

Moving to a skills focus also requires innovative sourcing to meet specific work-activity needs (for example, the gig economy and automation), and changing which roles companies need to source with traditional full-time-equivalent positions and which can be done by temporary workers or contractors. In the survey with global executives, about 70 percent said that two years from now they expect to use more temporary workers and contractors than they did before the COVID-19 crisis.

During the pandemic, we’ve seen how organizations have come together to utilize talent with transferable skills. For instance, McKinsey has supported Talent Exchange , a platform that uses artificial intelligence to help workers displaced by the crisis.

Make better decisions—faster

Companies that make decisions at the right organizational level  and that have fewer reporting layers are more likely to deliver consistently on quality, velocity, and performance outcomes and thus outperform their industry peers. The pandemic has trained the spotlight on the power of fast decision making, as many organizations have had to move dramatically more quickly than they had originally envisioned. For example, one retailer had a plan for curbside delivery that would take 18 months to roll out; once the COVID-19 crisis hit, the plan went operational in just two days.

HR can help with strong decision making by empowering employees  to take risks in a culture that rewards them for doing so. McKinsey research revealed that employees who are empowered to make decisions and who receive sufficient coaching from leaders were three times more likely to say that their companies’ delegated decisions were both high quality and speedy .

Introduce next-generation performance management

Companies are experimenting with a wide variety of approaches to improve how they manage performance. According to a McKinsey Global Survey , half of respondents said that performance management had not had a positive effect on employee or organizational performance. Two-thirds reported the implementation of at least one meaningful modification to their performance-management systems.

We identified three practices—managers’ coaching, linking employee goals to business priorities, and differentiated compensation—that increase the chances that a performance-management system will positively affect employee performance. HR plays an important role in embedding these practices in performance management by supporting the goal-setting process, decoupling the compensation and development discussion, investing in manager’s capability building, and embedding technology and analytics to simplify the performance-management process.

To strengthen an organization’s agility, HR should ask the following questions:

• Can we enable more effective decision making by pushing decisions to the edges of the organization, creating psychological safety  that empowers people, and building capabilities?
• How do we accelerate the shift to a more diverse and deeply motivated talent base, one that is supported through a human-centric culture that enables outperformance and superior experience?
• Which organizational areas or end-to-end value-creation streams would most benefit from a shift to new ways of working and organizing?

Scalability: How HR can drive value creation

The new normal of large, rapidly recurring skills gaps means that reskilling efforts must be transformational, not business as usual or piecemeal.

Lean into a learning culture by reskilling and upskilling

Effective reskilling and upskilling will require employees to embark on a blended-learning journey that includes traditional learning (training, digital courses, job aids) with nontraditional methods (enhanced peer coaching, learning networks, the mass personalization of change , “nudging” techniques).

For instance, Microsoft shifted from a “know it all” to a “learn it all” ethos, incorporating open learning days, informal social learning opportunities, learning data for internal career paths, and new platforms and products for its partner network.

Memo to HR: Look in the mirror

To drive and facilitate these workforce initiatives, HR must transform itself first. Talent is consistently ranked as a top three priority for CEOs, yet many lack confidence in HR’s ability to deliver. 3 Dominic Barton, Dennis Carey, and Ram Charan, “People before strategy: A new role for the CHRO,” Harvard Business Review , July– August 2015, Volume 93, Number 7–8, pp. 62–71, hbr.org. The HR function is often overburdened with transactional work and not well equipped to create value for the enterprise.

Yet people-first organizations look at business problems from the perspective of how talent creates value, and HR is well positioned to bring data-driven insights to talent decisions. HR can arm itself with data-driven insights and people analytics to support talent-driven transformation, and HR business partners can then consistently make talent decisions based on data.

Create a value-enhancing HR ecosystem

McKinsey analysis has shown that a preponderance of executives recognize how much external partnerships help companies differentiate themselves. Increased value can be created through ecosystems where partners share data, code, and skills. Success now requires “blurry boundaries” and mutually dependent relationships to share value. The need of the hour is for HR to collaborate on and leverage the landscape of HR tech solutions across the employee life cycle—from learning, talent acquisition, and performance management to workforce productivity—to build an effective HR ecosystem.

To strengthen an organization’s scalability, HR should ask the following questions:

• How can we set up platforms spanning multiple players in the ecosystem and enable new sources of value and employee experience through them?
• How can we become the best company to partner with in the ecosystem? How can we set ourselves up for fast partnering and make the ecosystem accessible?
• What are the critical skills that drive future value creation and how can we upskill our talent base accordingly?

Looking ahead: How transformation happens

As the organization of the future takes shape, HR will be the driving force for many initiatives: mapping talent to value; making the workforce more flexible; prioritizing strategic workforce planning, performance management, and reskilling; building an HR platform; and developing an HR tech ecosystem. For other initiatives, HR can help C-suite leaders push forward on establishing and radiating purpose, improving employee experience, driving leadership and culture, and simplifying the organization.

Given the magnitude of the task and the broad portfolio of value-creating HR initiatives, prioritization is critical.

In May of 2020, HR leaders attending a McKinsey virtual conference indicated that over the next two years, they wanted to prioritize initiatives that strengthen agility and identity. That included 27 percent who said that they would focus on responding with agility and 25 percent who prioritized driving leadership, culture, and employee experience. Next came mapping talent to value and establishing and radiating purpose, each at 13 percent (Exhibit 2).

At a second conference for HR leaders, 4 Survey of human-resources leaders at “Reimagine: Organizing for the future,” a McKinsey virtual conference held in June 2020. about half of the assembled CHROs said that they were focusing on reimagining the fundamentals of the organization and rethinking the operating model and ways of working in the next normal.

We see organizations making this shift. Throughout the pandemic, HR has played a central role in how companies build organizational resilience and drive value . CHROs and their teams can continue on this path by connecting talent to business strategy and by implementing changes in the three core areas of identity, agility, and scalability, as well as the nine imperatives that flow from them.

A more flexible and responsive model will also help organizations meet coming demographic shifts and other workforce changes. Millennials are becoming the dominant group in the workforce (with Gen Z close behind), creating novel challenges for organizations to meet their needs. The prominence of the gig economy and alternate models of working will only grow, with 162 million workers in the European Union and the United States working independently— 70 percent of them by choice . And the rapid spread of digital technology and automation is dramatically reshaping the global economy, with half the tasks people perform already automatable today.

These trends are not new, but they are approaching tipping points, placing organization at the top of the CEO agenda. CHROs can help leadership by transforming their own HR organizations: developing and reinforcing clear priorities; embracing new ways of working, including rapid iteration and testing with the business and seeking explicit feedback; and revamping the HR skill set by embracing agility and digital capabilities.

While clearly a trial by fire, the pandemic also provides an opportunity for HR to accelerate its shift from a service to a strategic function, helping to shape a more dynamic organization that is ready to meet the postcrisis future.

Asmus Komm is a partner in McKinsey’s Hamburg office, Florian Pollner is a partner in the Zurich office, Bill Schaninger is a senior partner in the Philadelphia office, and Surbhi Sikka is a consultant in the Gurugram office.

The authors wish to thank Talha Khan for his contributions to this article.

This article was edited by Barbara Tierney, a senior editor in the New York office.

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The Essential Link Between Business Strategy and HR Management

Caroline Reidy

The hr suite.

The business of HR is an increasingly interesting and often complex environment. The level of time and resources allocated to the HR function within an organisation varies dramatically. This article explores a few different aspects around the connection between a company’s Human Resource Management policies and the organisations business strategy.

An increasing number of studies demonstrate the importance of linking business strategy with deployment of human resources within an organisation. A company’s pool of human resources and talent are arguably some of its most valuable assets. A company which links it HRM with its strategic business plan stands to gain a strong competitive advantage in the marketplace.

Strategic decision making is about considering both the internal and external factors and the context around them. The internal factors could be the company’s mission statement, the organisational structure and whether it is a large multi divisional organisation or a smaller single product company. This would usually impact on how the selection, appraisal and development of employees is structured. The external factors could be the political, cultural and economic force which may impact the business.

The human dimension of the Company’s strategy refers to the key subject of employees and employment relations. This resource represents the potential value of workers for achieving goals and gaining organisational success. Management of this includes decision making, implementation and taking actions aimed at employee attitudes and behaviours to achieve the organisational goals.

Strategic HRM can be very effective in organisations when implemented correctly. It benefits the organisation in several ways. It can be a very useful tool to help identify and analyse both internal and external threats as well as opportunities. It also helps to provide a clear business vision and strategy. It is an important influence in the approach to the recruitment and selection process to get the right people with the right skillset into the most effective positions to maximise their potential within the organisation.

A key component of linking business strategy to HRM is a culture of clear communication and trust within an organisation. When employees are encouraged to become involved in various aspects of the business strategy it develops higher levels of trust and respectability between employees and the management team. This trust is built on the knowledge sharing which allows employees to also share in the vision and goals of the organisation. The right strategy therefore helps to retain talent and develop highly competent employees.

The Michigan model is often referred to in discussion around strategic HRM. The model is based on strategic control, organisation structure and people management processes. While it focuses on reward systems for motivating employees it also concentrates on managing human resources to achieve strategic goals. Therefore, having the right structure in place ensures issues are addressed in a timely and effective manner. Most importantly it gets ‘buy in’ from employees as they feel involved in contributing to the overall strategic plan of the organisation. This can result in higher levels of productivity from a high performing workforce.

It takes strong leadership and commitment to consistently maintain the link between HR practices and the strategic plan of the business. There are some barriers such as varying levels of financial support towards the implementations and follow up of HR, development and training policies. There may also be market pressures due to economic difficulties which make it difficult to recruit the preferred talent for specific roles within the organisation. The presence of Trade Unions and threats of industrial action can also have an adverse effect on an organisation’s development and performance in relation to the implementation of Strategic HR Management.

A significant number of Multi-National Corporations base their operations in low cost economies to increase their profit margins. Therefore, the effect of globalisation is also a significant factor affecting business strategy and HRM. As both social and business relationships in distant regions are now instantly linked by advances in communication it is much more sustainable to manage a global workforce.  However, while multinationals often locate to economies which may have lower operating costs and an attractive corporation tax rate, the strategy will only be successful if the pool of talent with the relevant skillset is available.  In summary, this can result in an even more competitive market around recruitment for organisations which demonstrates the challenges around linking business strategy with HRM. It is important that an organisation builds and maintains a strong capacity to recruit and retain high performing employees. Through ongoing training and development these employees would acquire a broad range of knowledge, skills and attitudes throughout their careers.

The importance of strong teamwork and collaboration between various stakeholders at the senior levels within an organisation is crucial to the success of any strategy.  When leaders can demonstrate their willingness to buy in to the combined business strategy and HRM processes of their organisation and openly share this with their teams it can be a very powerful and dynamic tool in gaining competitive advantage in the marketplace.

If you would like more information about using mediation in your workplace, please do not hesitate to contact Caroline or one of the team on 066 7102887 or email The HR Suite on [email protected]

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The information in this article is provided as part of Legal-Island's Employment Law Hub. We regret we are not able to respond to requests for specific legal or HR queries and recommend that professional advice is obtained before relying on information supplied anywhere within this article.

The main content of this article was provided by Caroline Reidy . Contact telephone number is +353 66 710 2887 / +353 86 775 2064 or email [email protected]

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Human Resource Planning: Definition & Top Strategies

Lucija Bakić

April 4, 2024

Human resource planning is a key strategy for ensuring long-term business sustainability and resilience.

In this guide, we’ll explore the essentials of human resource planning (HRP), why it’s so important, and the best practices to start your human resource planning process. To learn more about the broader process of resource management, read our guide to business resource planning . Key Takeaways

• HRP is a process that ensures that companies have enough capacity to meet customer demands and business goals.
• The main steps of the process include analyzing current availability, forecasting future demand, identifying capacity gaps, and developing and monitoring HRP strategies.
• Some of the main challenges include ensuring the accuracy of your forecasting with reliable data, maintaining the balance between billable work and capacity building initiatives, and promoting collaboration and transparency. 
• The right capacity planning solution can help you address the above with automation features, real-time data, and predictive analytics.

What Is Human Resource Planning (HRP)?

Human resource planning (HRP) is a process used to ensure that businesses have employees with the right skills, at the right time, and with the appropriate capacity to meet strategic goals.  Some practical examples of HRP workflows for various businesses include:

• An e-commerce business forecasting the need for IT capacity increases according to seasonal trends and scaling their infrastructure and support team.
• A design agency identifying higher demand for digital media through benchmarking and developing strategies to upskill and reskill its employee pool.
• A law firm initiating a succession planning strategy for the impending employee retirements by developing internal leadership candidates and recruiting external talent.

Why Is HRP Important? Top 4 Benefits

According to research by the Work Institute, 78% of the reasons for voluntary turnover could have been prevented by the employer if identified and addressed on time.  Human resource planning helps businesses increase employee engagement and drive various improvements by:

1. Maintaining a Qualified Workforce

HRP aligns talent capabilities with organizational goals through talent acquisition, training, and development initiatives. Ensuring you have a skilled workforce to meet future workforce requirements reduces the risk of inefficient workflows and supports daily business operations. Investing in employee talent and skills can also help increase employee engagement and satisfaction.

2. Improving Risk and Change Management

HRP is a proactive approach that focuses on identifying issues before they occur. Analyzing trends and forecasting future needs helps businesses create contingency plans for various scenarios. This can include high-impact external changes, such as technological advancements, or internal disruptions, like leadership transitions.

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3. Ensuring Your Business Is Competitive

HRP keeps businesses competitive by helping them attract the right talent and ensuring that current employees are skilled and engaged in the workplace. It helps companies adapt to changes quickly and efficiently, fostering the agility and proactiveness needed to stay ahead of industry trends and competitors. See more : The Top 13 Benefits of ERP

4. Optimizing Workforce Costs

HRP optimizes business costs by providing balanced employee utilization so that your agency isn’t spending excess money on non-productive labor costs. It also ensures that your business can do more work with adequate supply. Finally, HRP reduces the chance of unexpected resource gaps through effective forecasting, minimizing the need for last-minute hiring or overtime work. Related: Operations Strategy Examples

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The Main Steps of Human Resources Planning

The key steps of HRP include:

• Workforce analysis to determine your company’s current human resource capacity.
• Demand forecasting to future resource demand based on industry trends and internal needs.
• Gap analysis includes finding potential roadblocks in your HRP process and developing strategies to address them.
• Implementation and monitoring of your human resource strategies, usually by tracking key performance indicators.

Analyzing Current Availability

Workforce analysis involves a comprehensive evaluation of the current workforce’s size, skills, and capabilities. It assesses aspects such as:

• Employee productivity
• Job satisfaction
• Skill sets, including technical and soft skills
• Turnover rates

These metrics are used to identify your organization’s strengths and weaknesses. This is the foundation on which you’ll develop actionable steps to improve your HRP processes.

The utilization rate is the key metric for visualizing productivity — use Productive for real-time insights

Projecting Future Demand

Projecting future demand involves estimating the human resource requirements needed for an organization to meet its future goals. This forecast considers factors such as business growth, market expansion, technological advancements, and changes in operational processes. Three tools that are used in this process are:

• Ratio analysis , where historical data on the relationship between business metrics and workforce size is used to predict future staffing needs.
• Trend analysis , which examines patterns in the organization’s workforce data over time.
• Comparative analysis, whether by comparing internal resource planning practices across projects or benchmarking your performance against competitors.

Another potential strategy is utilizing real-time data, such as forecasting charts that depict the impact of resource scheduling on agency analytics.

Productive’s forecasting charts let you predict your company’s revenue and profit margins

Gap Analysis

Gap analysis compares future human resource needs against the current workforce’s capabilities to identify discrepancies or gaps. A way to conduct gap analysis is to monitor where previous projects went wrong to pinpoint inefficiencies in your workflows, such as miscommunication or a deficit of specific skills. You can do this by checking estimated vs real completion times for various tasks — ERP solutions can deliver these insights with time tracking features.  Then, by examining your upcoming projects or initiatives, you can identify and forecast potential areas where similar imbalances may occur.

Developing and Implementing Strategies

The final step is developing and implementing HR strategies to cover your company’s specific needs and requirements. These strategies may include:

• Creating a resource plan:  A resource plan is an in-depth document that contains information on your employees, their availability, and their scheduled time. It helps businesses follow strategic objectives and monitor their ongoing processes.

Get an in-depth overview of your business resources and their availability

• Employee engagement and retention strategies:  For example, drafting career development plans, introducing new benefits packages and competitive compensation, and promoting a healthy organizational mindset.
• Implementing modern software: Resource planning tools can support various steps of the HRP process, with features such as time off management, billable hours tracking, financial forecasting, real-time reporting, workflow automations, and more.

Best Practices for Effective HRP

Once you’ve pinpointed potential gaps and developed strategies to drive improvements, what are some best practices to ensure they stick?

Monitoring Your Progress

Whichever initiatives you decide to implement, monitoring them through key performance indicators (KPIs) is necessary to assess their effectiveness. However, keep in mind that while business metrics are important, some benefits of HRP may be hard to quantify. This includes better work-life balance and improved working environment.

Regular Review

HRP can take a long time to provide results. Agility and flexibility are needed to make sure that your strategies can stay aligned with changing business needs and priorities. Regular review helps identify where your strategies have gone off track to implement timely changes.

Continuous Improvement

HRP is an ongoing process. As such, your strategies will need to evolve alongside your business goals and circumstances. Incremental improvements are always better than sudden, expansive changes — consistently seeking feedback and analyzing outcomes is a way to ensure your HRP strategies remain effective over time.

Types of HR Planning 

There are different types or techniques associated with HR planning. Here are some common terms and how you can differentiate them:

Hard vs Soft HR Planning

• Hard HR Planning focuses on quantitative aspects of human resource management, such as headcount, costs, and labor allocation. This approach often involves in-depth data and forecasting for informed decision-making.
• Soft HR Planning  considers qualitative factors of workforce management, such as engagement, development, and well-being. It’s less focused on data and more on fostering a committed and resilient workforce.

Short-Term vs Strategic HRP

• Short-term HRP is more of a reactive approach that addresses immediate staffing needs and focuses on resolving urgent issues. It typically spans a timeframe of up to one year.
• Strategic HRP is a long-term approach that aligns workforce planning with the organization’s future goals and strategies. It involves forecasting workforce requirements, sustainable talent management, and other proactive strategies for business success.

Employee Reskilling vs Upskilling

• Reskilling involves training employees in new skills and capabilities to help them transition to different roles within the company.
• Upskilling focuses on enhancing the current skills and competencies to improve performance, stay competitive, and meet job requirements.

See more : Capacity Building 101

Future Trends in HR Planning

• Remote work is here to stay. According to survey results, 63% of professionals are willing to take a pay cut to work remotely (FlexJobs). If possible, consider including it as one of your benefits to drive a competitive advantage.
• In general, employee well-being initiatives are becoming more and more popular. This can include more flexible hours, hybrid or remote work, health insurance plans, as well as various fitness and wellness programs (learn more about workload management ).
• 72% of professionals agree that all forms of skill-based hiring are more effective than resumes. While the resume is still used to filter the pool of applicants, work-related tasks and technical questions have proven to be the more efficient and cost-effective way of hiring candidates (Test Gorilla).
• When it comes to daily workflows, 60% of professionals believe that automation helps them fight burnout and work-related stress. It allows for a more flexible work schedule, helps them be more organized at work, frees up their tasks for work they enjoy, and more (Zapier). Consider tools that can provide no-code automations to streamline day-to-day work.

The Challenges of Human Resource Planning

Now that we’ve gone through the main steps of the HRP, it’s time to address some of its main challenges:

• Accurate forecasting:  Predicting future needs accurately can be a challenge in itself. Not only does it require having an in-depth understanding of your business circumstances, but it’s also sensitive to changes in market demand and economic conditions.
• Maintaining a flexible workforce: Maintaining a versatile and skilled workforce requires careful management of work hours. This ensures that profitability isn’t compromised, and at the same time, avoids situations where training is neglected entirely for billable work. This balance between billable and non-billable time is crucial for sustainable organizational success.
• Aligning HR Strategy with Business Goals : Keeping track of the overarching business strategy in HRP can be hard, especially in large or rapidly evolving organizations. It requires transparent communication, cross-functional collaboration, and a deep understanding of the organization’s long-term objectives and the role of the workforce in achieving them.

The Solution: Utilizing Software for Enhanced HR Planning

A way to address these potential challenges is using tools with HR and resource management capabilities .  Modern software provides a way to visualize and forecast employee hours, activities, and their impact on business financials for more informed decision-making. It also helps businesses view project progress in real time to streamline stakeholder collaboration.

Adapt your project management to your working preferences with Productive

An example of such a tool is Productive , with key HRP features including:

• Time tracking
• Resource scheduling
• Workload balancing
• Time off management
• Financial forecasting

Book a demo today to discover how Productive can help drive efficient human resource management.

What is meant by human resource planning?

Human resource planning (HRP) is the strategic process of ensuring your business has the correct number of skilled employees to meet company goals. It involves talent management, employee performance and data analysis, needs forecasting, and more.

What are the 5 steps in human resource planning?

The five main steps of human resource planning include identifying current organizational availability, demand forecasting, capacity gap analysis, strategy development and implementation, and results monitoring and analysis.

What are the 3 key areas of human resources planning?

The 3 key areas of human resource planning (HRP) include workforce forecasting, talent management, and gap analysis. Workforce forecasting involves analyzing current availability and predicting the future needs of the workforce. Talent management encompasses various strategies, from recruitment, training, and development to succession planning. Gap analysis involves pinpointing areas of improvement by identifying where capacity fell short of meeting demand (skills, quantity, time, etc.).

Why is human resources planning important?

Human resource planning (HRP) is important because it ensures that the workforce is aligned with the organization’s strategic goals. It helps businesses get the most out of their human resources, both by improving acquisition strategies, developing current talent, and increasing retention. HRP also supports organization agility, flexibility, and resilience by building a well-skilled and satisfied workforce.

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• Human Resource Planning (HRP)
• Understanding HRP

What Is the Goal of Human Resource Planning (HRP)?

• Human Resource Planning FAQs

The Bottom Line

• Business Essentials

Human Resource Planning (HRP) Meaning, Process, and Examples

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

What Is Human Resource Planning (HRP)?

Human resource planning (HRP) is the continuous process of systematic planning to achieve optimum use of an organization's most valuable asset—quality employees. Human resources planning ensures the best fit between employees and jobs while avoiding manpower shortages or surpluses.

There are four key steps to the HRP process. They include analyzing present labor supply, forecasting labor demand, balancing projected labor demand with supply, and supporting organizational goals. HRP is an important investment for any business as it allows companies to remain both productive and profitable.

Key Takeaways

• Human resource planning (HRP) is a strategy used by a company to maintain a steady stream of skilled employees while avoiding employee shortages or surpluses.
• Having a good HRP strategy in place can mean productivity and profitability for a company.
• There are four general steps in the HRP process: identifying the current supply of employees, determining the future of the workforce, balancing between labor supply and demand, and developing plans that support the company's goals.

Michela Buttignol

What Is Human Resource Planning (HRP) Used For?

Human resource planning allows companies to plan ahead so they can maintain a steady supply of skilled employees. The process is used to help companies evaluate their needs and to plan ahead to meet those needs.

Human resource planning needs to be flexible enough to meet short-term staffing challenges while adapting to changing conditions in the business environment over the longer term. HRP starts by assessing and auditing the current capacity of human resources.

Here, identifying a company's skill set and targeting the skills a company needs enables it to strategically reach business goals and be equipped for future challenges. To remain competitive, businesses may need advanced skills or to upskill their employees as the market environment evolves and changes.

To retain employees and remain competitive, HRP often looks at organizational design, employee motivation, succession planning, and increasing return on investment overall.

Challenges of Human Resource Planning (HRP)

The challenges to HRP include forces that are always changing. These include employees getting sick, getting promoted, going on vacation, or leaving for another job. HRP ensures there is the best fit between workers and jobs, avoiding shortages and surpluses in the employee pool.

To help prevent future roadblocks and satisfy their objectives, HR managers have to make plans to do the following:

• Find and attract skilled employees.
• Select, train, and reward the best candidates.
• Cope with absences and deal with conflicts.
• Promote employees or let some of them go.

Investing in HRP is one of the most important decisions a company can make. After all, a company is only as good as its employees, and a high level of employee engagement can be essential for a company's success. If a company has the best employees and the best practices in place, it can mean the difference between sluggishness and productivity, helping to lead a company to profitability.

What Are the Four Steps to Human Resource Planning (HRP)?

There are four general, broad steps involved in the human resource planning process. Each step needs to be taken in sequence in order to arrive at the end goal, which is to develop a strategy that enables the company to successfully find and retain enough qualified employees to meet the company's needs.

Analyzing labor supply

The first step of human resource planning is to identify the company's current human resources supply. In this step, the HR department studies the strength of the organization based on the number of employees, their skills, qualifications, positions, benefits, and performance levels.

Forecasting labor demand

The second step requires the company to outline the future of its workforce. Here, the HR department can consider certain issues like promotions, retirements, layoffs, and transfers—anything that factors into the future needs of a company. The HR department can also look at external conditions impacting labor demand , such as new technology that might increase or decrease the need for workers.

Balancing labor demand with supply

The third step in the HRP process is forecasting the employment demand. HR creates a gap analysis that lays out specific needs to narrow the supply of the company's labor versus future demand. This analysis will often generate a series of questions, such as:

• Should employees learn new skills?
• Does the company need more managers?
• Do all employees play to their strengths in their current roles?

Developing and implementing a plan

The answers to questions from the gap analysis help HR determine how to proceed, which is the final phase of the HRP process. HR must now take practical steps to integrate its plan with the rest of the company. The department needs a budget , the ability to implement the plan, and a collaborative effort with all departments to execute that plan.

Common HR policies put in place after this fourth step may include policies regarding vacation, holidays, sick days, overtime compensation, and termination.

The goal of HR planning is to have the optimal number of staff to make the most money for the company. Because the goals and strategies of a company change over time, human resource planning must adapt accordingly. Additionally, as globalization increases, HR departments will face the need to implement new practices to accommodate government labor regulations that vary from country to country.

The increased use of remote workers by many corporations will also impact human resource planning and will require HR departments to use new methods and tools to recruit, train, and retain workers.

Why Is Human Resource Planning Important?

Human resource planning (HRP) allows a business to better maintain and target the right kind of talent to employ—having the right technical and soft skills to optimize their function within the company. It also allows managers to better train the workforce and help them develop the required skills.

What Is "Hard" vs. "Soft" Human Resource Planning?

Hard HRP evaluates various quantitative metrics to ensure that the right number of the right sort of people are available when needed by the company. Soft HRP focuses more on finding employees with the right corporate culture, motivation, and attitude. Often these are used in tandem.

What Are the Basic Steps in HRP?

HRP begins with an analysis of the available labor pool from which a company can draw. It then evaluates the firm's present and future demand for various types of labor and attempts to match that demand with the supply of job applicants.

Quality employees are a company's most valuable asset. Human resource planning involves the development of strategies to ensure that a business has an adequate supply of employees to meet its needs and can avoid either a surplus or a lack of workers.

There are four general steps in developing such a strategy: first, analyzing the company's current labor supply; second, determining the company's future labor needs; third, balancing the company's labor needs with its supply of employees; and fourth, developing and implementing the HR plan throughout the organization.

A solid HRP strategy can help a company be both productive and profitable.

International Journal of Business and Management Invention. " Human Resource Planning-An Analytical Study ," Page 64.

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2.3: The Process of Human Resources Planning

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• Page ID 46989
• Nina Burokas
• Lumen Learning

Learning Outcomes

• Describe the process of human resource planning

On a functional level, human resource management is responsible for developing human capital strategies that align with the organization’s mission, goals and objectives. Human capital planning—often characterized as a roadmap—generally has a 3–5 year timeframe. Human Resource strategy sets the direction for all the key areas of HR, including hiring, performance management, compensation and training and development.

The U.S Office of Personnel Management describes human capital strategic planning as the method by which human resource management “designs a coherent framework of human capital policies, programs, and practices to achieve a shared vision integrated with the [organization’s] strategic plan.” [1]

Personnel Management’s planning guide identifies the following essential elements:

• A clearly understood strategic direction
• Customer and stakeholder human capital management outcomes/goals
• Strategies/objectives for accomplishing the goals
• An implementation plan
• A communication/change management plan, if needed
• An accountability system

Developing a strategic direction requires a detailed understanding of the organization’s strategic plan and objectives, budgetary constraints, current workforce characteristics, key senior management and stakeholder perceptions regarding human resource challenges and requirements and internal and external factors driving human capital needs. The conceptual objective is to develop a vision of the future workforce. The implementation plan is a roadmap as well as a framework for transforming culture and operations. The accountability system establishes how success will be measured and tracked, information that is essential for measuring and evaluating performance and for monitoring progress towards objectives.

The guide recommends that data collection support the identification of key themes associated with any gaps between the current and desired workforce and related human capital functions. These themes become the broad human capital goals and are the building blocks of the plan. For example, talent, performance management and leadership might be themes that will be translated into goals. Goals would be developed to address the gap and specific objectives would be identified to support achievement of the goal. Implementation plans are developed with varying levels of detail but at an operational level, should identify the specific actions required, who is responsible, what resources are required and the completion timeframe.

Practice Question

https://assessments.lumenlearning.co...essments/18112

U.S. Government Accountability Office

For perspective, here’s an excerpt from the U.S. Government Accountability Office’s (GAO) 2013–2015 Human Capital Plan: [2]

Performance Goal: Strengthen recruiting and hiring initiatives to attract a diverse workforce.

Human Capital Initiatives:

• Improve recruitment program by expanding efforts to maintain relationships with colleges, universities, and pipeline and professional organizations through participating in virtual outreach efforts, hosting representatives from partner institutions, and inviting candidates to visit GAO.
• Build annual recruitment plans based on analysis of data from prior years, with consideration to GAO’s workforce diversity plan, budget, and workforce planning needs.
• Monitor hiring process data and compare this data to established goals.
• Offer incentives where needed for positions that are hard to fill to help recruit and retain staff with critical skills.

Quantitative Measures (Accountability)

• Meet or exceed established benchmarks to maintain a diverse workforce.
• Meet the 80-day goal (+/− 1 percent) for the hiring process.
• Meet the new hire target established in GAO’s performance and accountability report
• " Human Resources Management in Agencies; Final Rule. " Office of Personnel Management. April 28, 2008. Accessed July 30, 2019. ↵
• " GAO's Human Capital Strategic Plan 2013-2015. " United States Government Accountability Office. 2013. Accessed July 30, 2019. ↵
• Untitled. Authored by : You X Ventures. Provided by : Unsplash. Located at : https://unsplash.com/photos/vbxyFxlgpjM . License : CC0: No Rights Reserved . License Terms : Unsplash License

SHRM: alignment of HR function with business strategy

Strategic HR Review

ISSN : 1475-4398

Article publication date: 3 June 2014

Bagga, T. and Srivastava, S. (2014), "SHRM: alignment of HR function with business strategy", Strategic HR Review , Vol. 13 No. 4/5. https://doi.org/10.1108/SHR-03-2014-0023

Emerald Group Publishing Limited

Article Type: Strategic commentary From: Strategic HR Review, Volume 13, Issue 4/5

Thought leaders share their views on the HR profession and its direction for the future

Teena Bagga and Sanjay Srivastava

SHRM Connotation

Strategic human resource management (SHRM) is, indeed, one of the most momentous concepts in the field of business and management today. The idea of SHRM is to promote high performance workplaces and human capital management. SHRM can be defined as the linking of human resources (HR) with organisations’ strategic goals and objectives so as to improve business performance and develop organisational culture that nurture innovation, flexibility and competitive advantage. In an organisation, SHRM means accepting and involving the HR function as a strategic partner in the formulation and implementation of the company’s strategies through HR activities such as recruiting, selecting, training and rewarding personnel. It basically centers on HR programs with long-term objectives i.e. instead of focusing just on internal HR issues, the major focus is on addressing and solving problems that affect people management programs in the long run. Therefore, the primary goal of strategic HR is to increase employee productivity and to identify key HR areas where strategies can be implemented in the long run to improve the overall employee motivation along with productivity. Strategic orientation of human resource management (HRM) is important for all organisations irrespective of its size and domain. It simply requires the alignment of every HR function with business strategy. It establishes relationship between HRM and strategic management of the organization and facilitates the HRM to change its image as a “cost center” to that of a “strategic business partner”. Thus, the SHRM can be defined as the organisations action plan to align HRM with strategic business objectives so that the competitive advantage can be achieved through its skilled, committed and well-motivated workforce. This can only be possible if every HR function is strategically aligned.

Strategic human resource planning

Human resource planning (HRP) is a process of analyzing and identifying the need for and availability of HR so that the organisation can meet its objectives. The need for HRP is to reduce the significant lead time between recognition of job requirement and getting a qualified person to fill that need. This means HR is required to have an idea of the job market and how it can match to hiring needs as no organization can meet its goals without recruiting talented workers. Hiring, indeed, is an important aspect of HRP, as it provides the doorway for bringing in new employees and choosing individuals suited to the company’s culture and requirement. During hiring, the HR department looks for an applicant who specifically fits the job criteria or someone who is the most versatile individual. However, today HRP is viewed as a strategic operational process and its focus has shifted from traditional Hiring and Staffing to towards forecasting and succession planning that can handle different contingencies which intern impacts the success of business operations. Effective HRP can reduce turnover by keeping employees apprised of their career opportunities within the company. The success of HRP depends on how meticulously the HR department can integrate effective HRP with the organization’s business planning process. Strategic human resource planning (SHRP) is based on close working relationships between HR department and line managers. SHRM can be defined as a deliberate attempt of HR deployment to empower the organization to meet organizational goals, objectives and consistencies. Succession planning plays an important role in strategic alignment if HRP. Through succession planning organisations recruit skilled employees, develop their knowledge, skills, and abilities further, and prepare them for advancement or promotion into ever more challenging roles. This process ensures that employees are constantly developed fill each needed role. So, that a talent pipeline is maintained.

Strategic recruitment and selection

The core responsibility of recruitment and selection processes is “identifying the right pool of talent for establishing the right candidates”. Earlier, recruitment and selection was considered as traditional function with standard approach where the focus was on person–job fit. However, now, organisations are aiming at person–organisation fit and, therefore, applicants are selected against organizational characteristics rather than job-specific criteria. Today, choosing the correct employee is, indeed, essential to the development an effective SHRM system.

Strategic recruitment and selection (SR&S) can be defined as strategic integration of recruitment and selection with long-term business objectives so that strategic demands of the organisations can be translated into an appropriate recruitment and selection specification. In this, the alignment of candidate’s objective and business’s objective has become must. However, not all the job positions in the company are strategic and are not critical for the business operation. The strategic recruitment is focused only on the key job positions in the organization. It is focused on the hiring of the job positions needed for the accelerated growth of the business. The strategic recruitment can be a separate process from the usual recruitment process for the mass job positions.

Strategic training and development

Increasingly high performing organizations today are recognising the need to use best training and development practices to enhance their competitive advantage. Training and development is an essential element of every business if the value and potential of its people is to be harnessed and grown. By definition, training and development refers to the process to obtaining or transferring knowledge, skills and abilities needed to carry out a specific activity or task. Strategic positioning of training and development directly promotes organizational business goals and objectives. Key business challenges require that organisation thoughtfully gauge their market position and determine the talent, skills and knowledge to be successful. By adopting a strategic approach to training and development rather than an unplanned and ad hoc one, training and development initiatives become more targeted, measurable and effective. The strategic training and development (ST&D) is all about identifying, designing and delivering training programmes to employees to make them capable of delivering in accordance with business strategy. In addition, the evaluation of the outcomes to check the effectiveness of the training programme based on planning to determine whether the training was effective to its contribution to the business strategy.

Strategic performance management

Traditional performance management systems often fail to deliver desired business objectives because communications from the top are not always clearly understood further down the line, leading to a mismatch between corporate strategy and how it is translated into targets at a team or individual level. Then, if the business goals and strategy and the employee motivation and culture are not in harmony, results certainly suffer. This missing link can be complemented by the strategic performance management (SPM) approach. Top management must address how they actually want to manage performance? What targets must be met and by when? And how do they want managers and employees to work to achieve them? It is important not only to identify HR competencies in accordance with the business needs and develop selection and development practices to secure those competencies but also to evolve and implement a performance evaluation plan that links the performance of the employees to the strategic goals. It is certainly essential to have strategically linked compensation system to improve firm performance and to retain employees with required competencies. SPM creates this link between the strategy and culture of an organization and its ability to manage employees’ performance to have direct impact on business performance. SPM is actually about strategy implementation to deliver value by delivering the desired outcomes in accordance with business strategy. SPM link the individual’s objectives and performance management, driving the skill and capability requirements and ensure its alignment to the core values of the organisation.

Strategic compensation and reward management

The main objective of compensation policy is to give the right rewards for employee performances, their skills, competencies, their knowledge and experience to attract and retain them. It is again certainly an important motivator to reward the employees for their market worth and also for achievement of the desired organisational results. However, the traditional compensation and reward system alone cannot ensure the fulfilment of the business objectives. Strategic compensation and reward management (SCRM) facilitate the alignment of compensation and reward policy with business, which can be achieved by taking a data-driven approach so that the pay and benefits are allocated to only those positions and workers that produce the greatest return. One of the healthier ways to motivate employees and reward the stellar performers is to have variable pay rewards system based upon the individual and team performance to their contribution towards the achievement of organisations business objectives.

About the authors

Teena Bagga is an Assistant Professor and Sanjay Srivastava are both based at Amity Business School, Amity University, Noida, Uttar Pradesh, India. Teena Bagga can be contacted at: mailto:[email protected]

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4 steps to strategic human resource planning

Reading time: about 6 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.

Need advice on calculating your staffing needs and developing a staffing plan?

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

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.

Bring clarity to the hiring process to find the best candidates for your company.

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.

About Lucidchart

Lucidchart, a cloud-based intelligent diagramming application, is a core component of Lucid Software's Visual Collaboration Suite. This intuitive, cloud-based solution empowers teams to collaborate in real-time to build flowcharts, mockups, UML diagrams, customer journey maps, and more. Lucidchart propels teams forward to build the future faster. Lucid is proud to serve top businesses around the world, including customers such as Google, GE, and NBC Universal, and 99% of the Fortune 500. Lucid partners with industry leaders, including Google, Atlassian, and Microsoft. Since its founding, Lucid has received numerous awards for its products, business, and workplace culture. For more information, visit lucidchart.com.

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The Relation between Business Strategy and Human Resource Management: Conceptual Review

whilst there has been increasing interest concerning the relationship between business strategy and human resource management, limited research attention has been paid providing evidence in support of them. This study investigates business strategy and human resource management. The findings indicate a strong relationship between business strategy and human resource management. Further, the results provide support for the assertion that business strategy and human resource management fit can significantly assist a firm in improving performance. Therefore, support is obtained for the efforts at aligning business strategy and human resource management.

Related Papers

Leap-Han Loo

The universalistic perspective of human resource management practices perceives that a set of practices can achieve competitive advantage and firm performance. This study sought to investigate the relationship between best human resource practices and firm performance. A descriptive survey research design was used to gather primary data using self-administered questionnaire. The study population (n=312) was comprised of non-executives, executives, managers, and top management from seven major insurance firms at headquarters in the Klang Valley, Malaysia. The study found that performance appraisal, internal communication, SHRM alignment in the organization, and career planning were the human resource management best practices.

British Journal of Management

Fernando HR

Drawing on Snow and Thomas's (Journal of Management Studies, 31 (1994), pp. 457–480) matrix, we empirically explore the state of the art in human resource management (HRM) research. The data were obtained through a questionnaire directed to HRM scholars all over the world, in which they were asked about their particular theoretical and methodological approaches. The evidence obtained shows clearly that HRM scholars are progressively abandoning the universalistic perspective and completing their models with contingent and contextual variables. Trying to classify the different contributions proposed and discuss their integration, HRM is described as a field of research with three dimensions: subfunctional, strategic and international. The paper concludes that to provide reliable explanations and valid responses to professional problems, HRM research must advance simultaneously in these three dimensions. As follows from our analysis, there are certain HR issues that still need to be addressed: (1) the strategic use of HR practices, (2) their international applicability, (3) global HR strategies and (4) the synergic integration of HR activities. Nevertheless, to advance our knowledge in these issues, it seems necessary to integrate previous research in subfunctional, strategic and international aspects of HRM.

folorunsho oladipupo

Lucas Elumah

The paper studies the connection between Human Resources Management (HRM) practices and the performance of firm in Nigeria, focusing on firms owned by the government which are public companies and that of private firms owned by private individual across Nigeria. A multi respondent study of 285 firms both public and private across Nigeria was undertaken; collected data was analysed using correlation analysis as well as descriptive statistics in accordance with the aim of finding a fit between organizational performance and human resource management (HRM) practice. The result indicates that HRM practices are reasonably practiced by companies operating in Nigeria in public and private companies. It is also held that the type of firm whether public or private has an effect on the level of HRM practices.

International Journal of Human Resource Management

International Research Journal Commerce arts science

The purpose of this research paper is designed to identify extant literature that addresses the roles and relative influence of business line managers and human resource professionals in the management of human resources and specifically whether any of this literature focuses on the capital markets and investment banking sector. For the purpose of this study is ―'human resource environment' is defined as the socially complex organisation environment within which all internal and external stakeholders interact.The source material for the literature review includes academic papers published in respected management journals and human resource specific journals; books published for academic study and popular business texts; general management periodicals, human resource specific periodicals; business sector specific periodicals and reports; consultancy papers; and, conference material. A large and varied body of literature exists which investigates various aspects of the human resource environment within organisations and represents both quantitative and qualitative methodologies (Legge, 2005). However, the different methodologies and their associated methods do not always appear to have informed each other in a critical and progressive way and this is exemplified by Strauss (2001) who states that

sharon evangeline , C. Brewster

This paper provides a European perspective on Human Resource Management (HRM). It explores these issues by examining the growing field of comparative HRM; exploring some of the conceptual approaches to the topic and the different explanations for national differences that they espouse; considering some of the issues that make HRM in Europe distinctive; examining the notion of Europe itself and the variations within it; and considering whether the differences within Europe are reducing over time as a result of globalisation. The paper argues that Europe offers a wider ranging and more critical concept of HRM.

Gürhan Uysal

Aim of this study is to discuss differences and characteristics between HRM in the US, Europe and Asia. Divergence can be seen in HRM practices between markets due to cultural and legal differences that enables international firms to adapt local norms. To identify characteristics provides a firm of effectively managing their international HRM practices.Therefore, literature studies demonstrate differenf characteristics in managing human resources between markets.

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How Is Human Resource Planning Integrated With Strategic Planning?

All businesses, no matter how small, have three categories of resources available to them: the technology they use to create a product or service; the finance they use to operate and grow the business, and the people whose talents they use to accomplish the company’s goals.

Strategic planning is the process of figuring out why the organization is in business and what long-term goals it wants to achieve with its available resources. Human talent is one of those resources, so there’s a direct link between strategic and human resources planning – neither one can exist without the other.

What Is Strategic Planning?

The purpose of strategic planning is out figure out what a company wants to do and why it is in business. For example, an organization might decide that it wants to diversify into new markets because it has gone as far as it can go in its current markets. The strategic options here include:

Developing new products to sell to its existing customers.

Also Read: How Is Human Resource Planning Integrated With Strategic Planning?

Selling the same products to a completely new group of customers, such as people in a different country.

Buying a company that operates a different business model that may or may not complement the company’s business model.

The process of strategic planning would involve investigating all of these options and deciding which one represents the company’s vision of the future. From there, the company’s leadership team would start drilling down into the specific strategies that can enable the company to meet its big-picture goals.

What Is the Strategic Planning Process?

Businesses typically look three to five years ahead when formulating a strategic plan, and the process results in a document that articulates the company’s vision, mission, big-picture goals and the broad strategies it will use to reach those goals. This planning document is intended to guide leadership in its decision-making.

A key part of strategic planning is assessing the company’s resources. It’s easy for any company to dream big and have stratospheric ambitions, but what the company can realistically achieve is limited by the number and type of resources it has at its disposal. For most businesses, those resources fall into three main categories:

Technology resources: This includes all the equipment, processes and infrastructure the business uses to create the products and services that it brings to market.

Financial resources: Finance comprises all the liquid resources the company can use to carry out its business operations – namely cash in hand, short-term and long-term bank deposits, liquid financial investments like stocks and bonds, and approved bank loans.

Human resources: This resource comprises the people whose talents, skills and personal characteristics the business can use to accomplish its strategic goals. While technology and money are important assets, human resources are the most important, because technology and money need people to manage them.

As you can see, human resources are an integral part of any strategic plan. If the business does not have the right skills and talent in place to achieve its goals, then the strategic plan will fail due to a lack of knowledge and manpower. Similarly, if talent is acquired and deployed without reference to the company’s strategic goals, then you’re going to end up with a lot of people doing jobs that don’t add value to the business, and which don’t move the company closer to where it wants to be.

What Is Human Resource Strategic Planning?

The purpose of human resource planning is look into the future and decide what skills, knowledge and competencies the business is going to need in one, three or five years’ time to meet its strategic goals. For example, if the company is currently outsourcing its marketing function but intends to bring this function in-house, then an obvious early strategy is to recruit a full marketing team, from a senior manager all the way down to a junior marketing associate or intern.

Whatever the mission of the business, one of the major objectives of human resource planning is to dig into the talent pipeline and answer the following questions:

How can the business attract the right type of people in the right numbers? What kind of training and development can it offer to its current employees, to close any knowledge gaps? How can it balance projected labor demand with supply so there is no labor surplus or understaffing? Who are its key people, and how can it incentivize them to stay?

Answering these questions ensures the business has the right people in the right numbers in the right job roles to ensure the company’s profitability.

What Is the Relationship Between Human Resource Planning and Business Strategy?

Strategic planning and human resources planning basically have a symbiotic relationship, in that each function is dependent on the other. Here are some examples of how the relationship works in practice:

Impact assessments

When leaders start developing a strategic plan, they will liaise with different department heads to see how the proposed business strategies might affect them. The human resources planning team will figure out the financial impact of the initiative based on the recruiting, training and retention strategies that may be necessary to support the plan. If the initiative involves downsizing, for example, then human resources managers must look at the various options for decreasing the labor supply through dismissals, retirements, transfers out of the department, sabbaticals and voluntary quitting.

Invariably, there will be a time cost associated with a new initiative. It’s up to HR to feedback how long it will take to hire or upskill permanent staff members and whether the company can work with contractors in the interim. This helps senior leaders develop a timescale for the new initiative.

Executing the plan

As soon as a strategic initiative receives the green light, the human resources team must ready the company’s employees for the changes that are about to ensue. This might include changing people’s job descriptions, moving people between job units, policy making, motivation strategies, developing training programs, and pinpointing and eliminating labor shortages through recruitment and outsourcing.

Feedback and monitoring

Once the strategic initiative is implemented, HR will monitor the changes that are being made to the workforce to establish whether the policies are sufficient, affordable and sustainable. Because the strategic plan is a long-term plan, it is crucial for the business to keep monitoring its talent pipeline, and keep updating its demand forecast, to ensure that the business always has the right people in place to meet its objectives.

Which Comes First, the Chicken or the Egg?

Because strategic planning and HR planning are interdependent, it really doesn’t matter which plan the leadership team begins to develop first. In fact, they probably should be developed in conjunction with each other. That’s because the strategic plan cannot be finalized until there are supporting talent strategies in place from human resources, and the human resources plan cannot be finalized until the long-term goals of the company are clear.

The most effective organizations are those that achieve alignment between the technology, finance and human resources of the business and the formulation and implementation stages of the strategic plan. It should be an integrative activity, rather than a leader-follower process.

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Module 2: Human Resource Strategy and Planning

Why it matters: human resource strategy and planning, why learn about strategy in human resources management.

Although they may seem to be academic concepts, management theories and strategic planning practices have a significant impact on an organization’s performance—and, ultimately, its sustainability. What’s bizarre is that we’re still failing at the basics, despite extensive research and experimentation and the contributions of numerous thought leaders.

Here are a few statistics that highlight critical competence—and confidence—gaps: [1]

• Only 2% of leaders are confident that they will achieve 80% or more of their strategy’s objectives
• 54% of organizations achieve less than 50% of their strategy objectives
• 61% of respondents acknowledge that their firms often struggle to bridge the gap between strategy formulation and its day-to-day implementation
• 33% of leaders rate their organization as poor or very poor at implementing strategy

Key alignment (and logic) disconnects: 45% of organizations say changing staff member actions or behaviors is the toughest implementation challenge, and yet 95% of employees don’t understand their organization’s strategy, and the majority of front-line employees (90%) and middle managers (70%) don’t have compensation that‘s linked to the organization’s strategy.

Why it matters?

• 63% of successful companies have their business units aligned to their overall corporate strategy
• 70% of organizations that used a formal process to manage strategy out-performed their peers
• “Getting it right” has the potential to increase the value of an organization’s current strategy by 60–100%.

In this module, we’ll discuss the basics—management theory, strategic analysis, competitive strategy and execution—and how these decisions impact human resource management strategy and planning.

• Jansen, Hasse. " 94 Mind-Blowing Strategy Execution Stats ." Boardview. October 5, 2016. Accessed August 05, 2019. ↵
• Why It Matters: Human Resource Strategy and Planning. Authored by : Nina Burokas. Provided by : Lumen Learning. License : CC BY: Attribution
• Untitled. Authored by : rawpixel. Provided by : Pixabay. Located at : https://pixabay.com/photos/business-business-people-3421076/ . License : CC0: No Rights Reserved . License Terms : Pixabay License

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What is the correlation between hr strategy and business strategy.

HR is an integral part and the essential department of an organization. The level of resources allocated to the HR functions varies for different organizations. The human resource department is considered one of the most valuable assets of the company. When linked with a strategic business plan helps the company gain a competitive advantage in the market.

In a business setting, Strategic decision-making has to be done by considering both the internal and external factors and their context. The internal factors can be the organizational structure and the company’s mission statement. 

These factors usually affect the structure of selection and appraisal of employees. The external factors include the political, cultural, and economic forces that may impact the business.

The human dimension of an organization’s strategy involves managing and fostering employee relations. The human resource represents the potential value of workers to achieve organizational goals. 

Employee relations management includes implementing specific policies and taking necessary actions regarding employee’s behavior and attitudes to achieve organizational goals. 

Relationship Between HR Strategies And Business Strategies

When implemented correctly, Strategic Human Resource Management can be very effective in an organization. HR strategies and business strategies, when combined, can be very beneficial to the organization.

It acts as a valuable tool to help companies identify new opportunities and analyze internal and external threats. In addition, it also helps to provide a clear business vision and strategy. To maximize employee’s potential within the company, it is vital to implement a strategic selection process of employees to get the right people with the right skills into the most influential positions. 

Aligning HR Strategies With Business Strategies 

The following are few steps to be followed to align HR strategies with your business strategies:

• Define Success 

To make more efficient business decisions, the HR department needs to understand the business’s strategic goals. When the organizational objectives are not clear, it can be challenging for the HR department to align with these objectives or strategies and support them. 

When the HR strategies align with your business strategy with clear set goals, they help increase productivity and reduce cost, thereby moving the business towards success.

• Align And Set Your HR Strategies 

After setting clear organizational goals, the next step is to articulate the HR goals. HR strategies need to be planned to increase retention rate while decreasing the turnover and increasing productivity with a more efficient onboarding process. 

As the HR department plays a crucial role in promoting a company’s success, setting proper strategies and aligning them with business strategies is crucial. 

• Formulate Actions To Achieve These Goals 

Developing a proper plan of action is the next step in aligning your HR strategies with business strategies. Companies must create specific targeted actions to actualize objectives and achieve organizational goals.

It can be done by creating employee surveys to understand the employee satisfaction rate and then take necessary actions to improve their satisfaction level. It is crucial because satisfied employees are motivated to be more productive, thereby making it easier for companies to achieve organizational goals.

• Measure The Effectiveness 

The final step is to focus on the effectiveness of the campaign. With the alignment of the human resource department and including data-driven goals, it is easy to ensure that decision-making aligns with business goals and helps meet these goals. 

The HR team can measure the performance by analyzing data from marketing, sales, and accounting teams to ensure the departmental strategies align with overall business strategies.

One of the vital components of linking business strategy to human resource strategy is to develop an organizational culture of clear communication and build trust within the company. 

In addition, higher levels of trust and respectability between employees and the management team can be developed when employees are encouraged to become involved in various aspects of the business strategy. This trust is built with knowledge sharing, which allows employees to share in the organization’s vision and goals. 

The right strategy, therefore, helps organizations retain talent and develop highly competent employees.

Various factors affect the relationship between human resources strategy and business strategy. Therefore, Executive leaders must first understand the importance and benefits of aligning HR strategies with overall business strategies. 

Therefore, business owners should develop forward-thinking concepts and build a strong relationship with employees for effecting change in your organization and achieving your organizational goals.

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Increasing Integration Between HRM and Business Strategy

Interested in human resource management.

In today’s fast-paced business environment, the integration between human resource management (HRM) and business strategy is gaining more attention. The link between HRM and business strategy is crucial as it helps businesses achieve their goals and objectives. In this blog post, we will explore the benefits of integrating HRM with business strategy.

The Link Between Business Strategy and Human Resource Management

Human resource management plays a crucial role in the success of a business, as it involves managing everything from recruitment and training to employee retention and performance management. An effective HR strategy ensures that a company has the right people in the right positions, with the right skills and knowledge to achieve the company’s goals. On the other hand, a business strategy outlines the long-term goals and objectives of a company, and how it plans to achieve them. It includes decisions on product development, market positioning, and financial management. The HR strategy must align with the business strategy to ensure that the company’s goals are achieved.

One way that HR management supports business strategy is through talent management. A company’s workforce is its most valuable asset, and HR plays a key role in identifying and developing talent that can help the company achieve its goals. This includes recruiting individuals with the right skills and experience, providing training and development opportunities, and ensuring that employees are motivated and engaged.

Another way that HR management supports business strategy is through organizational design. An effective organizational structure ensures that the company can achieve its goals efficiently and effectively. HR plays a key role in designing the structure of the company, including job roles and responsibilities, reporting lines, and communication channels. This helps to ensure that the right people are in the right roles, with clear responsibilities and accountability.

Benefits of Integrating Human Resource Management with Business Strategy

Integrating HRM with business strategy has several benefits for businesses. Firstly, it helps businesses achieve their goals and objectives. HRM plays a critical role in ensuring that the business has the right people in the right positions, with the right skills and knowledge to achieve its goals and objectives. Secondly, it helps businesses to be more competitive in the market. The alignment of HRM policies and practices with the business strategy ensures that the business can respond effectively to changes in the market. Thirdly, it helps businesses to improve their performance. HRM policies and practices affect employee performance, and when aligned with the business strategy, they can improve the performance of the business as a whole.

Business Management and Human Resources – How the Two Are Interconnected

Business management and human resources are two essential components of any organization. While business management focuses on the overall management of the organization, human resources are responsible for managing the workforce. The two are interconnected in many ways, and their effective integration can lead to the success of the organization.

One of the most significant roles of human resources is to ensure that the organization has the right talent. Business management relies on human resources to recruit, train, and retain employees who align with the organization’s goals and objectives. It is the responsibility of human resources to ensure that employees are equipped with the necessary skills to perform their duties efficiently. The employees’ performance, in turn, affects the organization’s overall performance, which is managed by business management.

Another way in which business management and human resources are interconnected is through employee engagement. Employee engagement is critical to the success of an organization, and it is the responsibility of human resources to ensure that employees are motivated and engaged. Business management relies on human resources to create a work environment that fosters employee engagement, as engaged employees are more productive, innovative, and committed to the organization’s goals.

Business management also relies on human resources to ensure that the organization is compliant with labor laws and regulations. Human resources are responsible for ensuring that the organization’s policies and procedures are in line with the laws and regulations governing labor practices. This helps to mitigate the risks associated with non-compliance, such as legal penalties, negative publicity, and damage to the organization’s reputation.

Business management and human resources are two interconnected components of any organization. The success of the organization depends on its effective integration. Human resources play a critical role in managing the workforce, ensuring compliance with labor laws and regulations, and fostering employee engagement. Business management relies on human resources to recruit, train, and retain employees who can contribute to the organization’s success. By working together, business management and human resources can create a work environment that promotes productivity, innovation, and employee satisfaction.

Related post: 3 Surprising Benefits of HRM Careers

Examples of successful integration between hrm and business strategy.

Effective integration between Human Resource Management (HRM) and business strategy is critical for the success of any organization. A well-designed and executed HR strategy aligned with the overall business strategy can provide a competitive advantage, enhance employee engagement, and drive organizational performance. There have been numerous examples of successful integration between HRM and business strategy, and some of these are discussed below.

One of the most prominent examples of successful integration between HRM and business strategy is Google. Google’s HR strategy is built around the company’s core values, which include innovation, collaboration, and a focus on the user. The company’s HR practices are designed to attract, retain, and develop top talent who share these values. Google’s HR team also plays a critical role in developing and executing the company’s business strategy. For instance, Google’s HR team was instrumental in developing the company’s “20% time” policy, which allows employees to spend one-fifth of their working hours on projects of their choice. This policy has been credited with fostering innovation and creativity within the company.

Another example of successful integration between HRM and business strategy is Marriott International. Marriott’s HR strategy is built around the company’s core values of putting people first, pursuing excellence, embracing change, acting with integrity, and serving our world. Marriott’s HR practices focus on attracting, retaining, and developing top talent who share these values. The company’s HR team also plays a critical role in executing the company’s business strategy, which is focused on growth and expansion. For instance, Marriott’s HR team has been instrumental in developing and implementing the company’s “Spirit to Serve” program, which is designed to enhance customer service and employee engagement.

Successful integration between HRM and business strategy is critical for the success of any organization. Examples such as Google and Marriott International demonstrate how a well-designed and executed HR strategy can contribute to the overall success of the business. By aligning HR practices with the company’s core values and business goals, organizations can attract, retain, and develop top talent, drive employee engagement, and enhance organizational performance.

Future Trends in Human Resource Management and Business Strategy

The world of Human Resource Management is constantly evolving, and it is important to stay ahead of the curve to remain relevant and competitive in today’s business landscape. As organizations continue to grow and expand, HR professionals are being challenged to find new and innovative ways to attract, retain, and develop top talent. This has led to a shift towards a more strategic approach to HR management, where HR professionals are playing a more prominent role in shaping business strategy.

One of the most significant trends in HR management is the use of technology to streamline processes and improve efficiency. HR professionals are leveraging tools such as AI, machine learning, and automation to reduce manual workloads and free up time for more strategic initiatives. This technology is also being used to improve the candidate experience, with many organizations adopting virtual interviewing and assessment tools to be more effectively screen candidates.

Another trend in HR management is the increased focus on employee well-being and work-life balance. With burnout and stress becoming more prevalent in the workplace, organizations are investing in programs and initiatives to support employee mental health and wellness. This includes everything from flexible work arrangements and mental health resources to on-site fitness facilities and healthy eating options.

Finally, HR management is becoming more data-driven, with an increased emphasis on analytics and metrics to measure the effectiveness of HR initiatives. This data is being used to identify trends and patterns in employee behavior, which can be used to inform decision-making around recruitment, retention, and development.

Overall, the future of HR management is exciting, with new technologies and approaches emerging all the time. By staying on top of these trends and embracing a more strategic approach to HR, organizations can ensure they are attracting and retaining the best talent, while also driving business success.

If this is an area of interest, you may be interested in the Learnful Professional Diploma in Human Resource Management or the Learnul Professional Diploma in First Line Management .  Both programs examine the increasing integration between Human Resource Management and Business Strategy.

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The Role HR takes in Business Planning

By: Adam | Published on: Mar 29, 2019 | Categories: Featured , HR Strategy | 0 comments

HR and Business Planning

What is a HR Business Plan?

A HR Business Plan defines how a company is going to operate and develop over a given period of time.

It focuses on the elements of how to make a profit and identifies the risks which may prevent this. But don’t be fooled into thinking this is a one off process…. HR Business planning is ongoing!

This includes constant tweaks and changes depending on what is working and what isn’t. It is also the anticipation and preparation for changes that might need implementing as the plan progresses.

That change may come about through many things. Some examples you might experience are:

• Altering markets
• The need for new technology and product development
• Global pandemics!

Failing to plan is not an option!

60% of start-ups will fail within their first five years. The reason?

Most of their time is concentrated on their product and what’s immediately in front of them ( the urgent ).

They don’t place enough importance on what’s going on around them. Or how they should be ready to respond ( the important ).

What’s going on around them can be regarding an internal market as well as an external one.

The HR Business Plan

The Business Plan is a dynamic document that should ask challenging questions.

It should be reviewed on a regular basis with the company’s strategic objectives and goals in mind.

Long term objective and goals will be under constant scrutiny. This is to ensure that they are on target, remain relevant in a fluctuating market and are culturally robust.

Good HR business planning is about making smart choices in order to sustain the strategic vision.

But one significant reason for failure is that the business concentrates on a set of goal which is too narrow. Examples of this include:

• Product or service based

The key omission is often planning for the people who are going to make the business succeed.

The Role of HR Business Planning

This is where HR plays a vital role. It should work alongside key senior staff to ensure that plans include areas of HR involvement and participation.

Aligning the HR function with the business plan will ensure that the full potential of staff members is realised.

Visions and Values

In the business planning process, HR ensures that executive focus includes the heart and core of the business. This is its vision and values.

The HR professional position aligns the business’ vision and values as a solid foundation for strategy. This guarantees they are highlighted in strategy discussions!

It also ensures that it is the values of the business that drives people’s motivations and behaviours.

The HR professional demonstrates the importance of business culture. They also highlight how a dysfunctional culture can disable even the best of strategies.

HR is the only function with a business-wide view of employee performance, productivity and effectiveness.

Financial goals are usually the top priority, sometimes being the only priority. However, the HR professional can demonstrate how the attraction, retention and use of the most talented people can enhance secure financial rewards.

This is particularly when centred around a culture that is aligned to a progressive vision and strategy. Naturally, this is when addressed up front in the HR business plan.

Three Key Elements of HR in the Planning Process

1. resource planning.

Once the business goals are set, it is people involved who will carry them out. So, having the right people in the right roles at the right time is key.

A resource plan is the people equivalent of a financial forecast. Consider these questions:

• When will the business require more people?
• Of what type and skill-set?
• Where will you find them and how will you recruit them?
• How long before you need them do you need to commence your recruitment activities to ensure they are in place, inducted, fully trained and ready to go?
• Do you anticipate losing people over the period of a resource plan?

Staff may resign, retire or go on maternity leave. All of which will have an impact on the numbers and types of roles you need to recruit for.

The HR professional will be able to define every aspect of the process for hiring the right people. They will:

• Working with management to define the profile of the role
• Compose the specification of the person who will best fulfil the role
• Dictate how and where to advertise
• Know what to put in an advertisement to attract suitable candidates
• Define and structure interviews so that the best person may be selected.

HR can also ensure that before any hiring process begins, the hiring fits with the long-term HR business plan.

This ensures that the role is not just a knee-jerk reaction to a stressful period of overload.

Or one that will not become quickly redundant as the business stabilises, grows and changes

2. Organisational Design and Development

Psychological studies from as far back as the 1930’s have revealed that organisational structures and processes can influence the behaviour and motivation of a workforce.

In the modern era, the objectives of Organisational Design (OD) are twofold

• To put in place structures and processes that will increase operational efficiency and success, decrease risk and improve problem solving
• To create structures and processes that increase trust, motivation and commitment in the workforce, enabling better problem solving by confronting and managing problems through worker enablement and co-operation.

HR has a unique role here. It is involved in the creation and development of what the design of the organisation is and should be on a company-wide issue.

HR, with its whole-company overview can ensure that the creation of new systems and processes in one area are likely to have an impact on other related areas.

The HR professional will put forward people-based strategies to guarantee the consistency of the alterations across the organisation.

3. Training and Development

OD is likely to include the need for some new roles and changes to others. Therefore, training and development are guaranteed to be needed as part of the strategic growth process.

The HR business plan is likely to be looking at where the organisation will be in 5 -10 years’ time.  HR can ask if the workforce is acquiring sufficient skills to meet the growing demands that company’s a business’ growth.

A CIPD study revealed that 49% of respondents believed that they were either underused or over-skilled for the roles they were carrying out.

More significantly, those who felt that their skills were suited to their role were more likely to have job satisfaction (74%). At the end of the study, CIPD said:

Individuals who report using their skills fully in the workplace have higher levels of job satisfaction, earn more and are more resilient to change, while businesses benefit from a more productive workforce and increased profitability.

So, it’s going to be the HR professional who can speak authoritatively on the need for a strategic approach to training and development. This is part of HR business planning and will provide input to help the business achieve its goals effectively.

The HR professional, with access to objective data, is best placed to offer insightful ideas and plans on how to support the people aspect of the business plan.

If HR is allowed to be a key influencer in the business, they can solicit ideas, suggestions and feedback from both management and employees about both input and execution of strategy.

To Conclude on the Role HR Takes in Business Planning

HR’s key functions are all-important to the business planning process.

A shrewd organisation will realise this and make sure that a ‘plan for people’ plays a role of equal importance alongside the other facets of HR business planning.

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Linking organizational strategy to Human Resource planning

Human resource planning ultimately translates the organization ’s overall goals the number and types of workers needed to meet those goals. Without clear cut planning, and a direct linkage to the organization ’s strategic direction, estimation of an organization ’s human resource needs are reduced to mere guesswork. This means that human resource planning cannot exist in isolation. It must be linked to the organization ’s overall strategy . The steps involved in linking are as follows:

1. Assessing current human resources : Assessing current human resources begins by developing a profile of organizations current employees. This is an internal analysis that includes information about the workers and the skills they currently possess. From a planning viewpoint, this input is valuable in determining what skills are currently available in the organization . The profile of the human resource inventory serves as a guide for supporting new organizational pursuits or in altering the organization’s strategic direction. This report also has value in other HRM activities, such as selection individuals for training and development , promotion , and transfers.

2. Determining the Demand for labor: Once an assessment of the organization’s current human resources situation has been made and the future direction of the organizations has been considered, a projection of future human resource needs can be developed.

3. Estimating the future supply of labor: Estimating changes in internal supply requires the HR to look at those factors that can either increase or decrease its employee base. An increase in the supply of any units’ human resources can come from a combination of four sources, new hires, contingent workers, transfers in, or individuals returning from leaves. Decreases in the internal supply can come about through retirements, dismissals, transfers out of the unit, layoffs, voluntary quits, sabbaticals, prolonged illnesses or deaths. HRM manager should consider these increases and decreases to estimate the future supply of labor.

4. Estimated Changes in future supply: there are some factors outside the organization that influence the supply of available workers. We should review these changes outside the organization to estimate changes in the future supply.

5. Matching the demand and supply of labor: The objective of human resource planning is to bring together the forecasts of future demand for workers and the supply for human resources , both current and future. The result of this effort is to. Pinpoint shortages both in number and in kind, to highlight areas where over staffing may exist.

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