Top secrets of HR planning

by 12 Nov 2009

Planning is a tricky thing. Often it is impossible to simply create and execute a plan because there are too many unknowns and unexpected events. Nevertheless, even in the most difficult circumstances it is useful to make some sort of plan. If nothing else, planning is a way to think about the challenges ahead. HR planning is certainly difficult, but that is no excuse for not doing it. HR can’t force the business to do HR planning, but HR can nudge things in the right direction by having some clear expectations of what the business units should be doing when it comes to planning HR.

What do we mean by HR planning?

The first difficulty is that people are often unclear about what the term “HR Planning” means.

Here is a pretty good definition from the Government of Canada”

Rigorous HR planning links people management to the organisation’s mission, vision, goals and objectives, as well as its strategic plan and budgetary resources. A key goal of HR planning is to get the right number of people with the right skills, experience and competencies in the right jobs at the right time at the right cost.”

This definition gets us started, but it reveals the real problem with HR planning. It’s clear that everything that we plan to do in HR should be linked to business needs; the problem is that it’s very hard to know how to make that linkage. What we need is specific processes that will allow us to do some useful planning.

It’s worth remembering that once upon a time large organisations had sophisticated manpower planning systems to ensure they had enough people with the right skills at the right time. Those systems were abandoned when they proved incapable of accurately predicting what sorts of people were needed in a rapidly changing world.

Workforce planning is making something of a comeback, but we are still far from having agreed upon best practices in HR planning.

Two things to avoid

We may not have best practices, but we do have some clear ideas on what won’t work: to approach HR planning with unrealistic expectations.

One sort of unrealistic expectation is that we will be able to return to the days when we had highly detailed HR plans that stretched over many years (as in the old manpower plans). In today’s world a plan will probably focus on some critical areas and may emphasise general direction (“We will need more people who can work in China”) rather than detailed specifics (“We will need seven Mandarin-speaking product managers in four years.”)

Another unrealistic expectation is that managers will welcome another extensive planning process on top of the existing planning cycle. Whatever solution we have for HR planning, it has to feel like a natural part of business planning – not a load of extra work.

Two solutions

One reasonable approach is to weave HR planning into the existing business planning process so that HR issues are raised as needed. If a business unit is talking about shutting down a factory in the planning process, then it would be only natural to raise issues of what will happen to the people working there and how it could affect morale in other units at the same time.

Another approach is to have an ongoing cycle of planning processes: strategic, operational and HR. At American Standard with Larry Costello as HR leader, the top leadership team would meet with each of the business units to discuss strategy, then meet later to discuss operations, then meet later to discuss human capital. In this case it was a matter of having a dedicated and knowledgeable management team continually looking at the business plans from three different angles.

A common thread

Whether you integrate HR into the business planning process or have a three -part cycle of planning, the common thread is that HR is a part of the whole process, not an add-on. At American Standard, Costello didn’t sit on the sidelines until the human capital planning session came along. He was involved in the strategic and operational planning as well. In an integrated process, HR issues won’t be raised at the appropriate times unless HR is in the room when topics are being discussed.

The path ahead

The most important step in HR planning is to get the head of HR directly involved in the broader business planning process. If HR is in the loop, then they can ensure that critical HR planning issues are addressed in the right way at the right time. However, if HR is excluded from business planning, and HR planning is seen as an add-on, then it will be hard to create effective plans

David Creelman is CEO of Creelman Research, providing research and commentary on human-capital management. dcreelman@creelmanresearch.com