Futureproof and responsive: how strategic HR management and planning underpins business strategy

How an organisation’s HR department and HR strategy functions – whether effective or ineffective – can have a significant impact on wider business strategy, overall business performance and human capital management. As such, companies who wish to remain profitable, grow brand awareness and gain competitive advantage in the global marketplace should consider the robustness of their strategic human resource management efforts.

HR goes far beyond its perceived administrative responsibilities of forms, policies and payroll. One of its central tenets is oversight and management of an organisation’s most-important asset: people.

What is strategic HR management?

The role of strategic human resource management (strategic HRM) is to provide a framework linking people management and development practices to long-term business goals and outcomes – in essence, a ‘people strategy’. Its core purpose is to appropriately manage resourcing issues in alignment with both the goals of the organisation and the changing nature of work. In this way, HR management necessitates forecasting and implementing proactive measures. As well as this, strategic HRM informs other human resource strategies – for example, rewards and performance initiatives – and integrates them into the organisation’s overall strategic plan.

A coherent, considered strategic HRM framework – which focuses on longer-term people management – should:

• Ensure that people management practices drive the behaviour and climate required to add value and to create a thriving organisation
• Match resources and competencies to future needs
• Address wider issues of structure, quality, values, commitment and business culture
• Be uniquely defined by an organisation’s individual context, culture and objectives

What is strategic HR planning?

Strategic human resource planning (SHRP) ensures that a business has the right talent and skills in order to achieve its short-term and long-term organisational goals. For leaders of HR functions, a strategic HR planning process must attempt to predict both the demand for, and supply of, human resources. Only then can it identify staffing shortfalls, surpluses and succession planning, and manage them accordingly. 

SHRP is also a critical factor from a financial standpoint: from recruiting new hires to training existing employees, associated costs can be identified and included within the overall operating budget. An essential business activity, it’s crucial that any SHRP is rooted in wider contextual issues and specific business circumstances that could impact the ability to achieve sustainable performance.

When SHRP is executed properly, it brings a number of benefits to a business environment:

• A strategic approach is taken to identifying and managing skills inventory requirements – A more streamlined, strategic approach provides greater clarity regarding existing resources and how best to co-ordinate and optimise these. Potential human resources issues are isolated in time to take corrective action and avoid unhelpful side-effects, such as damage to morale, brand reputation and workforce health.
• Flexibility is incorporated into the workforce planning process – Greater flexibility enables organisations to be more agile, responsive and change-ready – all necessary elements to succeed in the modern business environment. Additionally, it can boost staff development plans, employee performance, motivation and productivity, and employee retention.
• It becomes easier to identify areas where change is required – HR professionals will be in a stronger position to challenge assumptions, implement creative solutions to problems, and highlight where approaches to diversity and inclusion can be improved.

Any planning will be necessarily informed by the size and complexity of an organisation, together with the familiarity with, and sophistication of, previous SHRP techniques. HR leaders and senior managers must plan accordingly to tie training and other HR activities to business metrics, goals and return on investment within specified timelines.

First steps in SHRP

Lucidchart – experts in workforce planning for Fortune 500 and other companies – report that 71% of CEOs believe that their employees are the most important factor in their company’s economic success. So, it’s easy to connect the dots between HR strategies and planning processes and achieving business objectives.

The first port of call is to assess the current HR capacity and conduct a gap analysis. Before recruiting any new employees, relevant stakeholders should understand the existing workforce at their disposal. It can be useful to develop a skills inventory for current members of staff; this could involve self-evaluating by means of a questionnaire, using past performance reviews, or a combination of these approaches.

Next, it’s time to forecast HR requirements. Organisations should ask a number of key questions, such as: Is the number of current staff sufficient to meet future growth? Do current employees need skills training to increase productivity or meet different work requirements? Is outsourcing required? This stage will involve both demand forecasting and supply forecasting, with an ultimate view to match demand and supply.

After determining current and future staffing needs, HR executives can work to develop and implement talent strategies. This includes developing current ‘talent’ and adding new ‘talent’ to an existing workforce – a key element of any strategic human resources management process – through means of:

• Recruitment
• Selection
• Training and development
• Remuneration and benefits
• Performance management
• Fostering positive employee relations

After an appropriate amount of time – and this will vary from business to business – it’s good practice to review and evaluate the HR management process plan. Examine different datasets to identify whether the SHRP has helped to achieve the company objectives, such as employee satisfaction, staff retention, profit and productivity. If there are obstacles or the results are not as intended, the plan may require revisiting.

Revolutionise HR practices and ambitions in your workplace

Want to succeed in people and performance management? Does your organisation, or future role, require the skills to audit and overhaul HR needs? The University of Lincoln’s 100% online MSc Management with Human Resources programme aims to develop your skills in ensuring that your HR planning reinforces wider strategic goals. 

On this master’s degree, you could gain a well-rounded understanding of business, strategic management and leadership, grounded in a human resources context. Designed to equip you to face HR challenges and transformations on a global scale, your studies will encompass employment relations, organisational design and development, strategy, finance and accounting, marketing and project management. With us, you’ll benefit from flexible, online study, expert tuition and support, and learning with a real-world focus.