HR and Business Planning
The 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. Business planning is an ongoing process! It’s the anticipation and preparation for changes that might need implementing as the plan progresses.
That change may come about through many things. Growth, altering market, or the need for new technology and product development are some examples
Failing to plan is not an option!
For new start-ups, there is the knowledge that 60% 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 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 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. This could be financial, product or service, and marketing. The key omission is often planning for the people who are going to make the business succeed.
The Role of HR in 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 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?
- How many?
- 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.
In addition, HR can ensure that before any hiring process begins, the hiring fits with the long-term 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 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 recent 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 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 business planning.