At a recent workshop on strategic human resources, an attendee asked “How do you prepare a human capital plan?” It’s a timely topic, since Q4 is often when annual plans and strategic plans are written for the following business year or planning cycle. Moreover, recent surveys and research show that CEOs want human resources leaders who can think strategically about the business. HR Leaders need to be able to work with executives to build the organizational and change management capabilities that enable the organization to successfully implement business strategies. Human capital planning is instrumental to those efforts.
Studies show that about 70% of business strategies fail due to poor implementation, and in many cases, it is the existing culture that stifles the new strategy.
Your business has a mission, guiding values and business strategies, which are usually contained it a strategic plan. Any new business strategy, even a Greenfield or blue ocean endeavor to take advantage of a new business model, a product launch, or a sales expansion to a new region, can fail due to poor implementation or not aligning the workforce to the company’s purpose and vision.
Human capital plans, sometimes called talent management, or organizational capability strategic plans, assist executives in overcoming the obstacles that new business strategies face.
Human capital plans determine the knowledge, skills and competencies the workforce requires. They also include the implementation tactics to attract, hire, develop or purchase a workforce that has those required competencies. For established, mature organizations, strategic HR issues often go beyond recruiting. They include how to pivot to new business strategies and accelerate cultural change for successful implementation. In order to accomplish this, human capital plans need to include analytics for the questions that employees have about new business strategies, the obstacles to overcome, and change management project plans to drive a successful implementation.
In my experience, human capital plans work best when they are straight forward, easy to understand, and include great analytics, project plans, costs and return on investment. They should also be aligned with the business planning cycle. For example, most of the strategic business plans I have seen recently are on rolling six or eight quarter cycles, and they are updated once or twice a year. An organization’s human capital plan should follow the same timing. When well-coordinated and executed, a human capital plan should fit hand-in-glove with your business strategies.
Here’s how to develop a successful human capital plan.
The first step is to become intimately familiar with your organization’s business strategies.
Human resources leaders need to understand their organization’s business market opportunities and threats, emerging technologies, new product plans, financial goals, and target areas for growth. Useful inputs include customer feedback and observations by executives. Do your executives, for example, look with envy on the employee competencies of market rivals? Are new workforce competencies or organizational capabilities required to meet the business strategies? It is vitally important to have a good pulse on the enterprise’s engagement with customers, market opportunities and competitive threats so that your talent management strategy has business relevance.
If your organization is planning a major expansion, launching a new commercial product, building a manufacturing or research site, or opening up a regional sales office, below are some key questions your human capital plan needs to consider:
- What capabilities, competencies and skills are required of your future workforce to achieve the enterprise’s strategic objectives?
- How can these competencies be hired or developed? What skill sets are needed on a regular basis and which ones are contingent on or can be obtained through a technology platform?
- What new skills are required of management?
- What organizational synergies will this expansion or new site require? Will it be a regional organization? Global? Need virtual teaming skills and technology?
- Are new systems or processes required? Do you need to upgrade existing systems and processes?
- How should your work environment change?
If your human capital strategy is focused in one area of talent management, such as a recruiting plan, stick to that focus. Recruiting plans should include the questions above, and also focus on the strategies and tactics for great recruiting. Such plans ought to include your sourcing tactics, the types of recruiters you need, additions to your existing recruiting staff, or the use of contractors or third part search. What process improvements are required for higher volume recruiting?
Other considerations should include your current company brand, and your internal metrics, such as new hire retention, overall retention, cost per hire, quality of hire, recruiting cycle time (from job posting to offer acceptance), and your competitive compensation position. Your plan should cover recruiting costs and the return on investment to the business. Understanding all of the above will go a long way toward helping you assess where you currently are and where you need to put your focus.
As you consider the image of your current brand, be sure to check how your company is viewed on social media, including sites such as Glassdoor and Tumblr. While you and your executives may view employee or former employee reviews as biased, they shape a public perception of your company that job candidates are reading!
After the analysis is complete, your human capital plan should be vetted with the major functions and leaders of the business. Then, flawlessly implement your plan and watch your company win in the marketplace.
Do you have a favorite story on human capital planning and its contribution to the success of your business? I would love to hear from you.
Victor Assad is a strategic human resources consultant and coach who works with key decision makers and human resources leaders on talent management, accelerating change, leadership development, innovation, and other strategic initiatives such as mergers and acquisitions, strategy implementation, and flexible workplace. Please e-mail Victor at email@example.com or visit Victor’s website at www.victorhrconsultant.com.