Lorem ipsum dolor sit amet, consectetur adipiscing elit. Vivamus convallis sem tellus, vitae egestas felis vestibule ut.

Error message details.

Reuse Permissions

Request permission to republish or redistribute SHRM content and materials.

HR Magazine, February 2001: Strategizing for HR

HR Magazine, February 2001Vol. 46, No. 2

A well-written business plan can earn you a seat at the table with top management.

If you thought business plans, also called strategic plans, were only for CEOs and dot-com entrepreneurs, think again. Business plans can be a boon to HR departments as well. If you haven’t already done so, now may be the time to develop your own HR business plan.

An HR plan can help you delineate your goals and your strategies for achieving them. It enables you to go beyond day-to-day tasks to see the larger purpose of your department and how it functions within the company. It helps you "align the resources and department to the broader needs of the organization," says Rogers Davis, assistant vice chancellor of human resources for the University of California, San Diego (UCSD).

Carol Asselta, SPHR, human resources manager for PECO Energy Company, a Philadelphia utility, says business plans help HR "think more holistically, to see systems rather than isolated elements. How does one thing impact another? How does everything fit?"

Having a plan also can aid communication within the department and with those outside HR, say experts interviewed for this article.

Davis, whose department is on its third strategic plan, says it "helps us communicate effectively what everyone is doing and know when progress is made." Asselta says having a business plan can help HR show executives the business rationale for its decisions by demonstrating how HR actions tie in to the company’s overall goals.

By contrast, the absence of a business plan can leave an HR department adrift in a sea of uncertainty. "The alternative is a haphazard approach where you are constantly putting out fires, with no visions of where you should be or what you should be doing to get there," says Lee Hargrave, author of Plan for Profitability!: How to Write a Strategic Business Plan (Four Seasons Publishers, 1999).

Robert G. Stovall, principal of Robert G. Stovall Consulting, an HR solutions firm in Houston, asks, "If you don’t have a plan, how do you know where you are going?"

What’s a Business Plan?

"Most HR folks don’t have a lot of training in how to do strategic planning," says Deborah Dwyer, PHR, associate professor and chair of the management department at the University of Toledo in Ohio. The first step, then, is to understand the difference between a companywide business plan and one geared specifically to the HR function.

A companywide business plan outlines the organization’s current situation and where it intends to go. In its simplest form, the plan is a goal statement. But the plan also includes information on the issues facing the company—competition, opportunities, market conditions, industry changes and the company’s strengths and weaknesses.

An HR plan describes what HR must do to help the company achieve the goals outlined in the business plan. An HR plan lists the action steps or milestones for meeting those goals, as well as target dates for completion and specific guidelines for measuring performance.

How far out should a plan project? It depends, says Hargrave, adding that "a typical company might have three to five years as the planning horizon."

The HR department at UCSD has a detailed two-year plan of short-term goals and a five-year plan of long-term goals, explains Davis. "We try to do plans longer than 12 months because the process is rather involved," he says.

Some question the value of making elaborate plans so far in advance, but Stovall says the planning process itself is worth the effort. Investigating the facts and your assumptions about the future will give you new information that can help you react more quickly and with greater confidence, he says.

"It is important to ensure the HR business plan integrates well and supports the overall business plan of the company," says Hargrave. "The HR business plan should be an integral part."

Identify Goals and Action Steps

It is crucial that the HR plan is in alignment with the overall business plan. Almost every organization has a business planning and budgeting cycle—and HR must ensure its business plan is a part of that process, says David Ripley, a lecturer on HR management at the University of Canterbury in Christchurch, New Zealand. "If you’re not a part of that [planning and budgeting] process," says Ripley, "your effort may just be a side show that nobody but you ever looks at." And, as a result, the HR and business plans may not align. Or, HR may not get the resources it needs.

Once you understand your company’s goals, you must establish your own HR departmental goals. Ripley uses a simplified approach that focuses on five questions:

  • Where am I now?

  • Where do I want to go?

  • What’s the difference between where I am and where I want to go?

  • How will I get there?

  • How will I know if I’m succeeding?
He also recommends focusing on these three areas:

Operational excellence. How well are you conducting basic HR operations? This includes all functional areas, such as recruiting and compensation. To determine how well you are doing in these areas, you can conduct employee surveys and review statistical data, such as turnover and absenteeism rates, in relation to industry averages.

For instance, Paychex Inc., a national provider of payroll, benefits and human resources services headquartered in Rochester, N.Y., wanted to improve its employee retention rates. "We recognized we needed a better reward package to retain people," says William G. Kuchta, vice-president of organizational de-velopment for Paychex.

The company decided that, in light of its consistently strong stock performance, it made sense to offer the employees stock options. Kuchta and his staff presented the proposal to upper management and the executives were so excited by the idea that they wanted to know how quickly the program could be implemented. The plan was "rolled out within eight days," says Kuchta.

The result? Turnover decreased, though Kuchta admits there are too many variables to claim that the stock options plan was the cause. But, he says, "There was a tremendous employee response and anecdotal evidence from employee comments, such as ‘This solidifies my being here’ and ‘I really appreciate it.’"

Short-range objectives. Every business objective has a human content. Find out what it is and make sure it’s addressed in your plan. HR must be seen as a contributor to the business. This will lead to HR practices that match current operational needs. For instance, Debra Schaefer, owner of the HR consulting firm Debra G. Schaefer & Associates LLC in Sylvania, Ohio, worked with Aeroquip-Vickars, a coupling manufacturer that is now part of Eaton Corporation. Aeroquip-Vickars acquired a business in Cincinnati, and Schaefer and her HR team immediately made plans to help the new employees transition into the company. "We prepared benefits and orientation kits for them to take home. We went down there and tried to answer their questions quickly. It was an opportunity to show how HR could be value-added in a business transaction," says Schaefer.

Strategic organization building. This includes the things you do to help build the human capital that will enable the business unit to survive in the future. For example, about four years ago, Paychex discovered that its products—payroll services—were becoming much more complex, as a result of new government regulations and an increasing interest in 401(k) plans. To maintain alignment with the company’s growth and marketing strategy, HR’s business plan created a "three-pronged approach with regard to operations: a new systematic approach to recruiting, compensation changes and a multi-step training program. We had to train people to deal with a whole different set of products," says Kuchta. Within two years, HR had created dramatically different training and compensation programs and was working on changing the employment practices.

Dwyer gives another example of how to translate a company goal into an HR one: "If a company that makes business applications computer software decides it wants to get into the virtual gaming market, it will need to hire a lot of Visual Basic programmers. You will have to estimate the cost of recruiting and retaining them or of retraining the programmers you already have, as well as providing them with the hardware, software and other resources they need."

Once you complete these calculations, Dwyer suggests meeting with the finance department to do a cost/benefits or return on investment analysis. "If we invest in 10 more programmers at this cost, what would be [the] value added?" If it costs $600,000 to accomplish a goal that will yield only an additional $400,000 worth of revenue, the goal may have to be eliminated or reworked. The data you bring to the planning session is crucial in making this type of decision, she says.

How much detail should you include in your plan? "If the issue is critical to the business, sweat the details," says Ripley. Dwyer concurs, "The more detailed it is, the more likely you are to implement it." But Kuchta cautions against spending too much time crafting the language of the plan and not enough time executing it. "We don’t bother with a lot of text. We only use bullets."

Ripley gives a litmus test: "Recruiting is a good example. You have critical skill positions—and you should be doing detailed planning related to those positions. However, you have other positions that can be filled easily and quickly, and everyone knows it—so don’t ask line managers to make detailed projections about how many of those people they will need, by unit, for the next five years, or spend time working on detailed recruiting plans. A good way to have a plan lose credibility and be of little value is to try to get people to spend time developing incredibly detailed plans about things that don’t warrant the time investment."

Once you have determined your goals and the action necessary to achieve them, then you must schedule target dates. Dwyer suggests doing "backward planning. You can say, ‘We want X to be done by this date.’ What tasks need to be done and what resources do we need in order to have this done by this date? Go backward to create a timeline." The HR department at Paychex also has done its planning this way. "You will see fairly quickly how big a problem you’ve got, in terms of your deadline. If you have a problem, break out all the steps and start to look for places you can run things in parallel," says Ripley.

Who Should Be Involved

While HR planning usually is done by the head of the HR department, Dwyer says it is important to "consult with the people who will have to implement the plan, the people who are actually doing the work. They have information about what you need" to accomplish your goals.

For example, Kuchta says that he usually selects a date several months in advance when he and his six managers will go off-site for a day to focus on strategic planning. In the interim, those managers are to meet with their staffs and internal clients, asking them what they think are important HR goals for the coming year. Kuchta then creates an agenda that includes presentations on the top goals from each functional area, as well as some brainstorming time. Although most strategic planning takes place over a day once a year, Schaefer says, "Any plan is a living document that is continually evolving."

Stovall also says your plan should be "reviewed by someone outside of HR who knows the business." Good candidates for this are your primary internal customers because you want to be sure you will meet their needs.

One group outside HR you will need to work closely with is your organization’s finance team. Unfortunately, most HR departments treat finance as a hurdle they must overcome, rather than a resource, says Kuchta. "Make them part of the planning team," he advises. "Don’t bring them in after you’re done."

And, he recommends, when it comes to crunching the numbers, "Don’t use industry averages. Find out the numbers for your own company."

Financial information is the backbone of any business plan. Thus, HR professionals who do not have a background in reading financial statements should get trained, says Dwyer. "They need to have some understanding of how the financial part of the business is operating."

Set Measurable Goals

Kuchta says that a plan, by itself, "means nothing. Only delivery counts." For every goal you create, you must have a way to measure performance. "Never set goals like ‘develop,’ ‘increase’ or ‘improve’ without a solid target, preferably with a number attached," he advises.

Ripley warns against falling into the activity trap. "Focus on outputs, not activity. You interviewed 1,000 applicants—so what? Measure accomplishments," he says. Even so-called soft goals, such as improved employee morale, can be quantified. For example, you can translate employee satisfaction surveys into numbers.

Asselta of PECO Energy adds, "Your deliverables must be quantifiable or qualifiable. Prove it in numbers. Businesspeople are numbers-driven."

Communicating After the Planning

Stovall recommends putting the plan "where all the relevant players can see it, review it and measure against it. I always liked the idea of putting the plan on the bulletin board so everyone could see it. There are ways to reduce the plan to a few charts and graphs for ‘public’ consumption, then you can plot actual results versus the plan. Do it out in the open so all can see. It will gain you a lot of trust."

Kuchta agrees: "I take the plan to every meeting, and often lay it out on the table and see how far along we are."

Asselta adds, "If you don’t have a business plan, you can’t keep your whole team together. You don’t know what your strategy is. A plan helps employees understand their purpose. It can energize people. They aren’t just doing day-to-day work; they’re progressing towards goals. Then HR isn’t just a firefighter at a tactical level. You can escalate the value of HR in the organization by linking with the company’s goals. Then, if you don’t already have a seat at the table, you’ll be worthy of one."

Kathryn Tyler, M.A., is a freelance writer and former HR generalist and trainer in Wixom, Mich. She may be contacted via her web site at


​An organization run by AI is not a futuristic concept. Such technology is already a part of many workplaces and will continue to shape the labor market and HR. Here's how employers and employees can successfully manage generative AI and other AI-powered systems.