Strategic HR Planning

Strategic HR planning is an important component of strategic HR management. It links HR

management directly to the strategic plan of your organization. Most mid- to large sized
organizations have a strategic plan that guides it in successfully meeting its mission.
Organizations routinely complete financial plans to ensure they achieve organizational goals and
while workforce plans are not as common, they are just as important.

Even a small organization with as few as 10 staff can develop a strategic plan to guide decisions
about the future. Based on the strategic plan, your organization can develop a strategic HR plan
that will allow you to make HR management decisions now to support the future direction of the
organization. Strategic HR planning is also important from a budgetary point of view so that you
can factor the costs of recruitment, training, etc. into your organization's operating budget.

Strategic HR management is defined as:

Integrating human resource management strategies and systems to achieve the overall mission,
strategies, and success of the firm while meeting the needs of employees and other stakeholders.

Standard 3.2

All employees have a work plan and performance objectives that identify the tasks/activities and
expected results for future performance.
Introduction to strategic HR planning

The overall purpose of strategic HR planning is to:

Ensure adequate human resources to meet the strategic goals and operational plans of your
organization - the right people with the right skills at the right time

Keep up with social, economic, legislative and technological trends that impact on human
resources in your area and in the sector

Remain flexible so that your organization can manage change if the future is different than
anticipated

Strategic HR planning predicts the future HR management needs of the organization after
analyzing the organization's current human resources, the external labour market and the future
HR environment that the organization will be operating in. The analysis of HR management
issues external to the organization and developing scenarios about the future are what
distinguishes strategic planning from operational planning. The basic questions to be answered
for strategic planning are:

Where are we going?

How will we develop HR strategies to successfully get there, given the circumstances?

What skill sets do we need?

What is this?

Related HR Management Standard:

Standard 6.1

The organization has a process to review staffing needs resulting in a plan to address those
needs.

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The strategic HR planning process

The strategic HR planning process has four steps:

Assessing the current HR capacity

Forecasting HR requirements

Gap analysis

Developing HR strategies to support organizational strategies

Assessing current HR capacity

Based on the organization's strategic plan, the first step in the strategic HR planning process is to
assess the current HR capacity of the organization. The knowledge, skills and abilities of your
current staff need to be identified. This can be done by developing a skills inventory for each
employee.

The skills inventory should go beyond the skills needed for the particular position. List all skills
each employee has demonstrated. For example, recreational or volunteer activities may involve
special skills that could be relevant to the organization. Education levels and certificates or
additional training should also be included.

An employee's performance assessment form can be reviewed to determine if the person is ready
and willing to take on more responsibility and to look at the employee's current development
plans.

Forecasting HR requirements

The next step is to forecast HR needs for the future based on the strategic goals of the
organization. Realistic forecasting of human resources involves estimating both demand and
supply. Questions to be answered include:

How many staff will be required to achieve the strategic goals of the organization?

What jobs will need to be filled?

What skill sets will people need?

When forecasting demands for HR, you must also assess the challenges that you will have in
meeting your staffing need based on the external environment.

How will the external environment impact on our HR needs?

Gap analysis

The next step is to determine the gap between where your organization wants to be in the future
and where you are now. The gap analysis includes identifying the number of staff and the skills
and abilities required in the future in comparison to the current situation. You should also look at
all your organization's HR management practices to identify practices that could be improved or
new practices needed to support the organization's capacity to move forward. Questions to be
answered include:

What new jobs will we need?

What new skills will be required?

Do our present employees have the required skills?

Are employees currently in positions that use their strengths?

Do we have enough managers/supervisors?

Are current HR management practices adequate for future needs?

Developing HR strategies to support organizational strategies

There are five HR strategies for meeting your organization's needs in the future:

Restructuring strategies

Training and development strategies

Recruitment strategies

Outsourcing strategies

Collaboration strategies

1. Restructuring strategies

This strategy includes:

Reducing staff either by termination or attrition

Regrouping tasks to create well designed jobs

Reorganizing work units to be more efficient

If your assessment indicates that there is an oversupply of skills, there are a variety of options
open to assist in the adjustment. Termination of workers gives immediate results. Generally,
there will be costs associated with this approach depending on your employment agreements.
Notice periods are guaranteed in all provinces. Be sure to review the employment and labour
standards in your province or territory to ensure that you are compliant with the legislation.
Termination packages are governed by case law as well as by employment standards legislation
(which only states the bare minimum to be paid). Consult with a lawyer to determine the best
approach to termination packages.

Attrition - not replacing employees when they leave - is another way to reduce staff. The
viability of this option depends on how urgently you need to reduce staff. It will mean that jobs
performed in the organization will have to be reorganized so that essential work of the departing
employee is covered. Careful assessment of the reorganized workloads of remaining employees
should include an analysis of whether or not their new workloads will result in improved
outcomes.

It is important to consider current labour market trends (e.g., the looming skills shortage as baby
boomers begin to retire) because there may be longer-term consequences if you let staff go.

Sometimes existing workers may be willing to voluntarily reduce their hours, especially if the
situation is temporary. Job sharing may be another option. The key to success is to ensure that
employees are satisfied with the arrangement, that they confirm agreement to the new
arrangement in writing, and that it meets the needs of the employer. Excellent communication is
a prerequisite for success.
Caution must be taken when considering the voluntary reduction of hours by existing staff. A
change in working conditions (e.g. hours worked per week) can be considered "constructive
dismissal" - especially in the case of permanent staff. Ensure that you obtain legal advice and
there is full written documentation.

Your analysis may tell you that your organization may have more resources in some areas of the
organization than others. This calls for a redeployment of workers to the area of shortage. The
training needs of the transferred workers needs to be taken into account.

2. Training and development strategies

This strategy includes:

Providing staff with training to take on new roles

Providing current staff with development opportunities to prepare them for future jobs in your
organization

Training and development needs can be met in a variety of ways. One approach is for the
employer to pay for employees to upgrade their skills. This may involve sending the employee to
take courses or certificates or it may be accomplished through on-the-job training. Many training
and development needs can be met through cost effective techniques. See the HR Toolkit section
on Learning, Training and Development for more information.
3. Recruitment strategies

This strategy includes:

Recruiting new staff with the skill and abilities that your organization will need in the future

Considering all the available options for strategically promoting job openings and encouraging
suitable candidates to apply

For strategic HR planning, each time you recruit you should be looking at the requirements from
a strategic perspective. Perhaps your organization has a need for a new fundraiser right now to
plan special events as part of your fundraising plan. However, if your organization is considering
moving from fundraising through special events to planned giving, your recruitment strategy
should be to find someone who can do both to align with the change that you plan for the future.

4. Outsourcing strategies

This strategy includes:

Using external individuals or organizations to complete some tasks

Many organizations look outside their own staff pool and contract for certain skills. This is
particularly helpful for accomplishing specific, specialized tasks that don't require ongoing full-
time work.
Some organizations outsource HR activities, project work or bookkeeping. For example, payroll
may be done by an external organization rather than a staff person, a short term project may be
done using a consultant, or specific expertise such as legal advice may be purchase from an
outside source.

When deciding to outsource to an individual, ensure you are not mistakenly calling an employee
a consultant. This is illegal and can have serious financial implications for your organization. To
understand the differences between employees and self-employed people, visit the Canada
Revenue Agency's website.

Each outsourcing decision has implications for meeting the organization's goals and should
therefore be carefully assessed.

5. Collaboration strategies

Finally, the strategic HR planning process may lead to indirect strategies that go beyond your
organization. By collaborating with other organizations you may have better success at dealing
with a shortage of certain skills.

Types of collaboration could include:

Working together to influence the types of courses offered by educational institutions

Working with other organizations to prepare future leaders by sharing in the development of
promising individuals

Sharing the costs of training for groups of employees

Allowing employees to visit other organizations to gain skills and insight

ABC Social Services provides support services to families in need. It has reviewed and updated
its strategic plan. As part of the strategic planning process the Board Planning Committee
learned that 15% of their social workers are planning to retire over the next two years and
recruitment of social workers has become increasingly competitive.

Outcome of the strategic planning process: One strategy developed by the Board Planning
Committee is to make ABC Social Services a preferred employer among organizations in the
area.

Possible HR planning strategies to meet this organizational strategy are:

Develop a recruitment and retention strategy based on discussions with the social workers. Items
to consider are: flexible work arrangements; contracting with a counselor for the social workers
on an as-needed basis (give them someone to talk to about the stresses of the job); provide
professional development opportunities that give them increased skills for dealing with the issues
their clients face.

Tie the pay scale of the social workers to the pay scales of social workers working for the
municipality (the appropriate percentage to be determined. For example, the pay of social
workers in the organization may be tied at 90% of the pay at the municipal level).
Provide placements for social work students and show them that ABC Social Service would be
an excellent employer after graduation.

Decide the unique strategies that you will use to position yourself as an employer of choice,
based on needs of your employees and potential candidates.

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Documenting the strategic HR plan

Once the strategies for HR in your organization have been developed they should be documented
in an HR plan. This is a brief document that states the key assumptions and the resulting
strategies along with who has responsibility for the strategies and the timelines for
implementation.

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Implementing the strategic HR plan

Once the HR strategic plan is complete the next step is to implement it:

Agreement with the plan

Ensure that the board chair, executive director and senior managers agree with the strategic HR
plan. It may seem like redundant step if everyone has been involved all the way along, but it's
always good to get final confirmation.

Communication

The strategic HR plan needs to be communicated throughout the organization. Your

communication should include:

How the plan ties to the organization's overall strategic plan

What changes in HR management policies, practices, and activities will be made to support the
strategic plan

How any changes in HR management will impact on staff including a timeframe if appropriate

How each individual member of staff can contribute to the plan

How staff will be supported through any changes

How the organization will be different in the future

It is impossible to communicate too much (but all too easy to communicate too little), especially
when changes involve people. However, the amount of detail should vary depending upon the
audience.

Legislation and mandate

Ensure that the actions you are considering are compliant with existing laws, regulations and the
constitution and bylaws of your organization.

To review laws relating to employment, visit the HR Toolkit section on Employment Legislation
and Standards

Organizational needs

Whether you are increasing or reducing the number of employees, there are implications for
space and equipment, and on existing resources such as payroll and benefit plans.

Evaluation

HR plans need to be updated on a regular basis. You will need to establish the information
necessary to evaluate the success of the new plan. Benchmarks need to be selected and measured
over time to determine if the plan is successful in achieving the desired objectives.