The Link Between Strategic Planning and Human Resource Planning
By Andrea Soberg, CHRP
All organizations, no matter how large or small, have three critical resources that must be used effectively for the organization to be successful. These critical resources are:
- the technology that is used to create the product or deliver the service;
- the finances the organization uses to pay for whatever it requires; and,
- the people whose skills and talents are utilized to do the work that is needed.
The main driver in the use of its resource is the mission and vision of the organization; these identify the reason for the use of the resource. Successful organizations have strategic and business plans that are specific to how these three critical resources are managed and utilized.
The Technology Resource
The technology resource refers to the tools or objects used to create and/or deliver an organization’s product or service. This resource could be as simple as a pen used to write invoices or as sophisticated as a computer system that is used to design a product. The management team within an organization identifies the appropriate technology that is needed to achieve the mission of the organization. The type and amount of technology is determined by how much of a service or product the organization wants to create or deliver. An amount is identified by the goals outlined in the vision statement of the organization and in the strategic plan. The type is identified by what is currently used in the industry and what would be most effective for the organization and its mission.
There are three areas where strategies are developed for the technology resource. The technology strategic plan is the plan that identifies how to: obtain the technology; maintain the technology; and adapt the technology. Once the type and amount of technology is identified, plans on where to purchase them or build them are developed. Once obtained, this resource must be maintained to provide optimum performance. As an organization competes in the marketplace, products and services change. In addition new methods are created that are more efficient. To effectively manage these new requirements, some technology may need to be adapted to deliver the product or service in the new way. If adaptation of the technology does not sufficiently address the need, organizations may resort to obtaining new technology.
The Finance Resource
The finance resource refers to the money or capital that is used to pay for or fund all the organization’s activities. This resource includes money that is generated by sales, loans, grants, or donations. It also includes any capital assets that could be sold or used as collateral toward further loans or grants. Just like the technology resource, there are three areas where actions are identified for the finance resource. The finance strategic plan is a plan that identifies how to effectively: generate the money; manage the money; and, forecast the revenue and expenses.
The amount of money required to successfully run an organization is calculated by the managers as they determine their needs for the accomplishment of their departments’ goals and objectives. This typically includes identifying the costs of running the business and developing a budget for the ongoing expenses of the department. These expenses include all those required for purchasing, maintaining and adapting technology and compensating all employees for the time spent working.
The Human Resource
The human resource refers to the people whose knowledge, skills, and abilities are utilized to create and deliver the product and service. This resource is considered to be an organization’s greatest resource. This is due to the fact that an organization could not be managed or products and services created and delivered without the use of the KSAs of people. Technology and money are also required to achieve the goals of the organization, but these resources cannot be utilized without some assistance from people.
There are three areas where plans are developed for effectively utilizing the human resource. The human resource strategic plan identifies how to: attract the right types and numbers of people; develop the knowledge, skills and abilities of employees; and, retain the employees within the organization.
Successful organizations have the right types and amount of people to perform the required duties to achieve the organizations’ objectives. Initially this involves finding the right type and amount of people in the market place. Once these people are working for the organization, their KSAs need to be kept current for the technology they are using or the clients with whom they are interacting. Time and money is spent on regularly developing the KSAs. Since organizations don’t usually want to lose a resource in which they have made an investment, they develop and implement systems that retain this resource. These systems include identifying appropriate human resource management techniques to motivate the performance of the employees.
When developing strategic plans, the management team ensures that the plans for each of the resources are developed in conjunction with each other. This is due to the fact that the resources are interdependent of one another. The interdependence means that the result of whatever is planned for and acted upon with one resource will have an influence on the plans of another resource. The management team and the HR professional must understand the link between the three resources and how best to develop strategic plans for each resource. Figure 1 shows a pie chart of the three critical resources. This picture shows that each resource is equal in importance and is connected to each of the other. The outside circles demonstrate that each is driven by its own operational plan which in turn is driven by the organization’s strategic plan which is driven by the organization’s mission and vision.
It doesn’t matter which resource the management team begins to develop first. Each could be developed separately, but before a strategic plan is finalized there needs to be a matching of the requirements of each to the other. Organizational effectiveness is achieved when there is alignment between the technology, finance, and human resource strategic plans, and these plans are focussed towards achieving the mission. The management team is responsible to the organization’s stakeholders to utilize and manage the three critical resources in a responsible manner. As the management team identifies the extent to which the technology, the money, or the people will be used the impact on one another is calculated. This impact analysis is included in the development of the strategic plans for each resource. The final strategic plan for the organization culminates in an integrative outcome.
3 Critical Resources: Interdependence and Influence on Strategic Planning
Andrea Soberg completed a Masters in Industrial Relations from the University of Toronto in 1984 and has been a Certified Human Resource Professional (CHRP) since 1999. She is currently Dean of the School of Business at Trinity Western University and also leads the HR specialization for the School. For the last 25 years she has also operated a consulting business that specializes in strategic human resource planning. Andrea has regularly volunteered for BC HRMA as a mentor, delivered workshops on HR planning, and was on the national team developing the exam questions for the National Knowledge Exam (NKE).