HRCI PHR – Business Management and Strategy – The HR and the Strategic Planning Process
1. Strategic Planning Process and the Role of HR (1)
Strategic planning process and the role of HR in topic one the strategic planning process and the role of HR. You will identify key stages in the strategic planning process, look at examples of activities from each stage, and gain a better understanding of the alignment of specific HR actions to the strategy plan. Strategy planning is an organization wide long term plan that helps the organization focus on how to achieve its goals in the future. It involves three basic questions where is the organization now? Where does it want to go from here? And how will it get there? Strategy planning links the goals and activities of the organizational functions such as operations, sales and marketing, finance and accounting, and HR with a single purpose of organizational success. Strategy planning helps to identify organizational opportunities and capitalize on internal strengths. It encourages forward thinking and promotes a proactive rather than reactive culture.
Other benefits of strategic planning include decisions which are better aligned to the organizational goals, successful change management, and clarity of purpose for the individual department as well as the individual employees. The strategy planning process is based on a basic problem solving or decisionmaking model. It involves several stages strategy formulation, strategy development, strategy implementation, and strategy evaluation. In the first stage, called strategy formulation, the organization’s vision and mission statements are developed and the organization’s value are defined. The second stage, called strategy development, requires a thorough analysis of factors found inside and outside the organization.
In the third stage, known as strategy implementation, short term goals are set, action plans are created, resources are allocated to the various business units, and activities and jobs are defined for employees. The final stage, called strategy evaluation, involves the assessment and evaluation of strategies and performance and any modifications needed to ensure the achievement of organizational goals. Strategy planning is a critical or a cyclical process. The evaluation of the strategy provides feedback to be used in the process and helps direct any adjustments necessary.
2. Strategic Planning Process and the Role of HR (2)
So strategy planning is a cyclical process. Strategy formulation leads to a strategy development, which leads to strategy implementation, which leads to strategy evaluation, which in turn leads back to strategy formulation. In the strategy formulation stage, developing organizational vision and mission statements is key to the strategic planning activities. Organizational vision and mission statements provide the company’s general goals that the strategic plan, the employees and all business activities will be geared to achieve. The vision statement is the leadership team’s view of what the organization will look like in the future. The vision statement must be inspiring and inform its employees, customers and other stakeholders what long range success looks like for the organization.
A mission statement is a bit more specific and describes how the organization would achieve its vision, including what activities are most important. An effective mission statement attempts to answer questions such as who exactly is the organization, what does it do? And who are its customers? Organizational values define the organization’s standards for conducting business and sets the standards for employee behavior and conduct. These values should be sustainable and won’t usually change with changes in product lines or business processes.
Organizational values are at the heart of any company, though in many organizations it may be informal or unwritten. In the second stage of strategy planning, strategy development, scanning and analyzes of the environment, both internal and external to the organization is conducted. Long term organizational goals are established and strategies to achieve these goals are determined. After having developed its visions, mission and values and conducted its external and internal environmental scans, the company is ready to establish long term objectives. These are smart objectives.
That is, they are specific, measurable, action oriented, realistic and time based. These are goals that the organization will seek to achieve in pursuit of its vision and mission in the long term, strategies are set to provide direction on how the company is going to achieve long term success. Strategies at the highest level in the organization, called corporate Strategies, deal with questions such as what business and market will the organization compete in? Is the organization oriented for growth? Is it instability or is it scaling you?
3. Strategic Planning Process and the Role of HR (3)
An environmental scan and analyzes considers the present and future factors influencing the direction and goals of a company. An environmental scan provides important information about the strategic direction of the company, which is valuable input in the strategic planning process as well. That analyzes is used to analyze an organization’s internal strengths and weaknesses as well as its external opportunities and threats. Internal strengths and weaknesses are generally under the company’s control. External opportunities and threats are usually beyond the company’s control. Appropriately executed Sweat Analyzes helps the company take advantage of external opportunities by leveraging its internal strengths and minimizing its weaknesses and the potential impact of external threats.
There are several important factors in the external business environment that may affect the company’s business strategy. One model that categorizes forces in the external business environment into social, legal, economic, political and technological factors is commonly referred to as the Slapped model. This model helps organizations in the information gathering process, scanning the external environment and improving organizational knowledge.
Environmental scanning and strategic planning chart shows that external and internal scanning are done. This can be an example in external scanning, opportunities and threats from the Swap Analyzes and the Slapped analyzes are considered in internal scanning vision, mission value, strength, weaknesses from the Sword analyzes are also considered based on external and internal scanning, strategic direction is decided and based on strategic direction, strategy plans are done.
4. Strategic Planning Process and the Role of HR (4)
In the third stage strategy implementation, the strategic plan is put into action. Organization goals are defined for implementation at the business unit and functional or departmental levels with key activities including short term goal setting, action plan development, allocation of resources and the motivation of employees. Long term company goals are further broken up into short term tactical goals, which must be met in order to achieve the organizational level goals. Tactical goals are shorter, often six months to one year.
Many organizations adopt a participatory approach in defining tactical goals in order to ensure participation by as many employees as possible. Resources are often allocated and employees are motivated at this stage to align their efforts with the company’s goals. Once the business and department goals are defined, they are further defined into steps implemented by individual employees, teams, departments or business units. Action plans are often defined with the authority, responsibility and control structure for the business unit or the department.
Once the action plans are developed, the appropriate resources must be provided before governmental and businesslevel goals can be accomplished. These resources may include human resources, financial resources and physical and technological resources as well. Allocation should be consistent with the priorities set by the goals. The priorities also determine how many and what kind of resources will be required to implement the strategy. The action plan may require additional employees, the contract of specific tasks, of the purchase of new technology or equipment. What all of these activities have in common is that they involve funds and plans for cash inflow or outflow, which is called the budget.
5. Strategic Planning Process and the Role of HR (5)
The fourth and final stage. Strategy evaluation involves reviewing existing strategies, measuring performance, and taking corrective actions needed to ensure success. As you can see from this video, this is a circular process that may cycle through several times for each strategy. The goal of strategy evaluation is to determine if strategies are helping the organization achieve its goals and then making any necessary adjustments. A proactive review of current strategies may be necessary with changes in the external or internal business environments, such as change in strengths or weaknesses. Changes in external business environments may result in new opportunities or threats as well. When this happens, corrective actions include revisiting and revising strategies to address the changes and to get the process back on track.
The company should also be prepared to immediately adjust tactical goals and action plans if problems in the performance metrics are discovered. Some of the performance metrics may include financial indicators such as revenues, market share, cost, profitability and margin, return on investment, net income, assets or other equally important metrics such as customer satisfaction, customer loyalty, defection, number of complaints received, productivity, and defect rate. Corrective action may require new action plans and the reallocation of resources, revising early goals, establishing new ones, or establishing a new incentive and reward system to motivate employees to achieve the revised goals. So stage four strategy evaluation is a cyclical process. Measure leads to take corrective action, which then leads to review.
6. Strategic Planning Process and the Role of HR (6)
Like any other functional strategy, the HR strategy is driven by the vision, mission statement, and values you create for the Department to guide HR employee tasks. In order to align the HR function with a strategic plan, HR professionals need to understand the industry and the business environment. They also need to gain working knowledge of the roles and processes in the functional areas. You need to use knowledge of the organization and other functions to fulfill HR’s functional mission, build partnerships and alliances with key individuals inside and outside the organization, and offer insightful, suggestions and feedback supported by facts and objective data. HR’s key functions are vital to the strategic planning process.
Therefore, HR must become a strategic partner in the strategic planning process at every stage. You can accomplish this by having greater interaction with employees at all levels of the organization, highlighting the importance of HR activities and how it contributes to the organization’s core capabilities, and setting strategic goals for key HR areas and implementing those goals by translating them into effective HR practices. As HR professionals, we must have the skills necessary to fulfill our strategic responsibilities. We need to have research abilities and connections in order to benchmark against other successful companies.
We are responsible for developing recruitment and retention plans in order to find and keep the most suitable employees. That means helping our employees be the best they can be. It is important for an organization to motivate employees and provide opportunities for continuous growth. Developing performance management systems is one way HR professionals provide the strategic advantage to the organization. Change management is critical to the company as well. Leading and participating in change management, such as restructuring programs, is an important HR function and also vital to the long term success of the company is risk management. HR’s role involves identifying risk and taking steps to mitigate their impact.
7. Strategic Planning Process and the Role of HR (7)
Before we move on, we are going to pause for a moment so that you can answer some review questions. The strategic planning process is based on the basic problem solving or decision making model and involves four key stages. Match each statement to the key stage it describes, not descriptions are used, strategy formulation, strategy development, strategy implementation, and strategy evaluation. These are the options and these are the targets. The organization’s vision and mission statements are developed and its values are defined. A thorough analyzes of the internal and external environment is conducted, short-term goals are set, action plans are created and resources are allocated to activities. Strategies and performance are assessed and modified to ensure that goals are met and organizational compliance plans are developed, and this is the answer for you to compare.
Strategy Formulation The first stage in the strategy planning process is when organizational mission, vision and values are developed and defined. It is a stage that includes decisions about stakeholder participation, time frame for plan completion, and the tools and methods that will be used to collect and analyze data. Strategy Development The second stage in the strategy planning process happens when all factors both inside and outside of the organization are analyzed to help establish functional strategies to meet long-term goals. Strategy Implementation The third step in the strategy planning process is when the strategic plan is put into action. This includes setting short term goals, developing action plans, defining jobs, allocating resources, and motivating employees to align their efforts to achieving the goals. Strategy Evaluation The fourth and final stage in the strategy planning process involves reviewing existing strategies, periodically, measuring performance, and taking corrective actions needed to ensure the achievement of organizational goals. HR professionals often help in developing organizational level compliance plans with regard to labor and employment laws and employee safety as well. HR plays a key role in managing change, but these are not steps in developing organizational strategy. Strategy planning is a cyclical process.
Each stage in the strategy planning process involves performing a number of activities to ensure organizational goals are met, match stages of the strategy planning process to activities performed in that stage. Here we have the options strategy formulation, strategy development, strategy implementation, and or strategy evaluation. And here we have the targets decide what the future of the organization will look like and what activities will help achieve this. Conductor Swed analysis to look at internal and external factors that might affect the company.
Set short-term departmental goals and responsibilities and provide support needed to achieve goals and measure revenues, profitability, customer satisfaction and productivity to make sure they are meeting organizational goals. And this again is the answer for you to compare. Strategy Formulation activities include creating the vision of the company’s future and the mission or how will pursue its goals. It also includes defining values or standards for conducting business and employee behavior, who will participate in the process, the time frame for completion, and the tools or methods to be used to analyze data.
Strategy development includes performing an internal and external analysis of all factors that might affect goal achievement. That’s what analyzes examines internal factors of organizational strengths and weaknesses and external factors such as opportunities and threats. In addition, an organization might perform slept analysis, which analyzes the social, legal, economic, political and technological external environmental factors. Strategy implementation involves setting short term goals to be completed in six months to one year, breaking down tactical plans into steps for individuals, teams, and departments or units and allocating resources, including human, physical, financial or technical support. Strategy valuation includes assessing a number of performance metrics such as financial indicators, customer satisfaction and loyalty indicators, employee productivity, and product reliability.
This stage also includes corrective action activities needed to change plans, resource goals or employee motivation levels to meet organizational objectives. HR professionals assist in developing functional strategies and action plans to realize employee potential and efforts toward meeting organizational goals in several ways. Which statements describe actions that you can take as an HR professional to align the HR function with the strategic plan? Here have the options develop recruitment and retention plans, develop performance management systems, lead and participate in change management identify and reduce the impact of risk to the organization, create a vision for the organization and or determine corporate social responsibility and this is the answer for you to compare. Option One this option is correct. HR professionals are responsible for developing recruitment and retention plans.
HR professionals are the most qualified in the organization to create effective plans for recruiting and retaining the best employees. Option Two this option is correct. It is important for an organization to motivate employees and provide opportunities for their continuous development. Developing performance management systems is one way you can provide this strategic advantage to the organization. Option Three this option is correct. Change management is critical if an organization is going to meet its goals. Leading and participating in change management, such as reengineering and restructuring programs, is an important HR function.
Option for this option is correct. There are always risks. You need to be alert to possible risk to the organization. Risk management involves identifying risk and taking steps to reduce their impact. This means that organizational processes must be audited to discover areas that are not in compliance or are exposed to risk. Option Five this option is incorrect. The HR function awards in alignment with organizational objectives driven by the organization’s mission, vision and values. It does not work in isolation of these by creating the organizational strategy and option. This option is incorrect. How an organization decides to help the community by being socially responsible is a matter for the entire executive team and is not an action that you take when aligning the HR function with organizational strategy.
8. Organizational Life Cycle and Structure (1)
Organizational lifecycle and structure. Organizational structure is a critical factor in a successful organizational strategy. In topic two, Organizational Lifecycle and Structure, you will gain a better understanding of the key characteristics associated with each stage of the organizational life lifecycle and identify various elements of the organizational structures. The success of a company can depend greatly on the management team’s understanding of where the company is in its life cycle and responding accordingly. The current phase of the organization in this cycle can give management important insights into the challenges it may face and the strategies necessary to keep the company from declining. The organizational life cycle is a model showing how organizations move through a fairly predictable sequence of evolutionary stages.
However, it is important to remember that once a company passes through a stage in its life cycle, it may revisit that stage a number of times. As organizations pass through the various stages in the life cycle, they are impacted by external environmental circumstances as well as internal factors. The structure of the organization defines its formal reporting relationships, procedures, controls and lines of authority in the decision making process. The current organizational structure may be developed over time as a response to internal and external pressures, or it may be the result of a deliberate strategy which supports the direction and goals the company has chosen for itself. Whatever the case, it is important for you as an HR professional to understand it and work with it to maximize performance and keep everyone moving in a positive direction.
9. Organizational Life Cycle and Structure (2)
There are generally four phases to the organizational life cycle. One is startup or introduction to growth, three maturity and four decline. Through the strategic planning process, we can analyze the organization’s place in its life cycle. Each stage of the life cycle has distinct characteristics, opportunities and pitfalls. As part of the strategic planning process, HR professionals should keep the individual characteristics in mind to gain a better understanding of where the organization is today and for using strategic planning in its future. In the startup or introduction phase, the company is usually relatively small, nonbaurectic and focused on survival and growth. Leadership is focused on gaining market share through new customers and securing necessary financial and other resources. Employees hired during the stage must be able to multitask, have an entrepreneurial mindset and be willing to accept a relatively low pay base, often in return for equity in the company.
Employees tend to be more experienced and can be up and running in a very short time, and there are few internal systems. However, some basic policies and procedures may be set. So again, to sum up, a graph may compare various stages in the organizational lifecycle startup, growth, maturity and decline. You can draw this to see it by yourself. The x axis of the graph is label time. The graph starts from zero when an organization is at the start stage, the graph ascends as it reaches the growth stage. The graph reaches the peak when the maturity stage and starts falling in the declining stage. In the table below the graph, the first stage of organization lifecycle, that is startup stage is explained as per the table. Leadership is a challenge. Task overlap when division of labor is done. Organization is very centralized with very little formalization and little use of internal systems. This might be an example for you to use.
10. Organizational Life Cycle and Structure (3)
During the growth stage, the organization grows its market share and expands facilities, marketing efforts and employee base. Challenges often include order, backlogs and scheduling issues as the company adjusts to the increased demand for its products or service. Existing employees sometimes struggle with delegation because they are used to doing many or all of the aspects of their positions by themselves. And above all, the company needs a clear direction to continue growing.
So organizational life cycle growth looks like this a table can show the growth stage in the life cycle of the organization. In this phase, delegation is a challenge. Division of labor happens across many departments, centralization happens among a few leaders and departmental heads. Formalization of a few rules, policy and procedure manuals is done, and internal systems like early stage control systems, budget performance reports, and so on are put in place.
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