Strategic objectives are now the focus of HR executives worldwide. It was common in the past for top management to wait until the strategic plan was formulated before beginning strategic planning, which determines the organization’s overall goals and objectives. However, in today’s times in order to gain a competitive advantage, strategic planning is a constantly evolving process. Occasionally, an organization may need to diversify its staff. In other cases, downsizing may be necessary due to external factors. The recent recession post-Covid led to a decrease in company valuations, an increase in business failures and firms spinning out or selling off their non-core businesses. When business was booming, strategically planned companies expanded their business thanks to correct planning and implementation. HR plays a crucial role in achieving this.
So how do companies manage to have that cutting edge and constantly innovate?
Strategic planning is a must! It can be divided as:
- Identifying the organizational mission
- An assessment of the organization and its environment
- Setting specific goals or directions
- Developing strategies for achieving those objectives
The strategic planning process is essentially an in-depth study of the strengths, weaknesses, opportunities, and threats (SWOT) framework that has an effect on the company.
What is your Company’s Mission?
Establishing the corporate mission is the first step in strategic planning. The mission is the reason for a company’s existence. What is more important, maximizing profit or increasing share price? Is it better to focus on the stability of earnings in order to ensure the security of employees? Assisting with these questions can be a valuable service provided by HR. In addition to these missions, there are many others that can be undertaken. Decide on the principles that will guide management decisions when determining the mission.
Firstly, determine the company’s mission, then formulate objectives in accordance with the mission. They should be challenging, but attainable, measurable, have a time frame, and should be written down.
What is an ENVIRONMENTAL ASSESSMENT?
Examining external conditions, threats, and opportunities you must do a thorough check of competencies, strengths, and weaknesses within the organization. There is also a need for the company to be socially responsible and environmentally friendly. How does the company intend to deal with its customers? Corporate cultures are shaped by the answers to these questions. Top management expects HR activities to be closely aligned with this mission and add value toward attaining these targets.
SWOT Analysis
A SWOT analysis is typically conducted after an organization has determined its mission and assessed its strengths, weaknesses, threats, and opportunities. The process of making strategic plans involves the flow of information from both the internal and external environments. An organization’s strengths, weaknesses, and competencies are revealed from within. Organizational strategists can identify threats and opportunities in the external environment by scanning them.
Let us use LinkedIn as an example to understand SWOT analysis. To capture opportunities and avoid threats, the company should capitalize on its strengths and minimize its weaknesses. LinkedIn, for example, can take advantage of the following opportunities, including the growing adoption of LinkedIn’s recruitment services by corporations, urbanization, changing attitudes toward employment, and an increase in premium subscriptions.
It is possible for HR professionals to connect with more candidates who subscribe to LinkedIn using LinkedIn technology and services than they would normally be able to with traditional recruitment methods like corporate career portals, campus hiring, recruitment agencies, and job boards by using LinkedIn technology and services. As well as identifying the strengths and weaknesses of the workforce, HR professionals are in the best position to do so. In the case of a merger or acquisition, HR could work with top management to determine whether the current workforce can be successfully integrated into the merged workforce. Does the merged company’s workforce add value to the company, or does it only duplicate talent? It is essential for HR professionals to stay on top of all people-related matters during any reorganization.
Threats always counterbalance opportunities. LinkedIn, for instance, is facing two significant threats. Who are LinkedIn’s Competitors? Google and Facebook. They too have highly used social media platforms, so they could rival LinkedIn’s success by offering similar services.
Objective Setting Objectives are the desired end results of any activity.
Objectives should have four basic characteristics:
(1) They should be expressed in writing
(2) they should be measurable
(3) they should be specific as to time, and
(4) they should be challenging but attainable
Differentiation Strategy or Lowest Cost Strategy?
Factors such as profitability, customer satisfaction, financial returns, technological leadership, and operating efficiency have to be taken into consideration. A cost-benefit analysis is vital after all the motive of any business is to generate profit. HR professionals are technically in the people business so they should be involved in the strategic objectives. For the sake of illustration, let’s consider two fundamental strategies: lowest cost and differentiation. The lowest-cost strategy focuses on gaining a competitive advantage by being the lowest-cost producer of a product or service within the marketplace while selling the product or service at a price advantage relative to the industry average. In order to achieve the lowest costs, companies build efficient facilities and seek to minimize costs in areas such as operations, marketing, and human resources. Differentiation strategies are used to create unique products and services that set them apart from their competitors.
Let us take the example of Proctor and Gamble. They have Ariel as well as Tide which are both detergents. While Tide follows the lowest cost strategy Ariel is more of a premium brand which is how they differentiate the brand. The two products are not competing with one another. They have their own market space. Differentiation strategies depend on customer service, technology, and added value to build their brand loyalty having brand loyalty is imperative if the company needs to spend on research and development and has higher costs resulting in higher cost of the product. HR plays an important role in strategizing here.
It is imperative to reduce output costs per employee for a lowest-cost strategy. An employee role that promotes a lowest-cost strategy should consist of repetitive and predictable behavior, a short-term focus, primarily autonomous or individual activities, and a high concern for the quantity of output. The key roles of employees in differentiation strategies include highly creative behavior, long-term focus, cooperative and interdependent behavior, and a higher level of risk-taking. Diversification strategies depend more on employee creativity, openness to innovative work approaches, and willingness to take risks than on lowest-cost strategies. Differentiation strategies also require longer time frames to reap the benefits of these behaviors.
Strategy Implementation
Strategic planning is very important but the crucial part is implementation. It is the most difficult part of the process. Plans may be well formulated and extremely dynamic but they can benefit the organization only when implemented correctly! The management’s leadership ability, organizational structure, information and control systems, production technology, and human resources all will require strategic changes in the dimensions of the organization.
Leadership
A leader is able to lead by example and get others to follow. Managers must guide other members of the organization to develop the behavior required for strategy implementation. Higher-level managers could form teams and help spread the strategy through the lower levels. HR matters regarding leadership rest on HR’s shoulders. There should be an encouragement to adopt and adapt to the new strategy. The structure of the form depends on the business. Small businesses have a casual informal approach and may be able to adopt a high level of change in a short span of time whereas larger corporations have more formal and rigid structures. But that should not mean the structure is so rigid that it does not change, perhaps even frequently. New startups or tech companies would be able to reorganize frequently but even massive Fortune 500 companies like Fiat Chrysler have gone through complete organizational changes. There are many different variations of organizational structures available and it is the job of HR to decide which would be appropriate for the company and implement that.
Information and Control Systems
HR has to prove itself by working and developing these systems. There has to be an integration of information and control systems in order to incorporate the strategic plan. What do the information and control systems include? Among the information and control systems are reward systems; incentives; objectives-oriented systems; budgets for allocating resources; information systems; and the organization’s rules, policies, and implementations.
Technology
Technology is of utmost importance in today’s world. In today’s digital world accurate technology should be used to accomplish the targets set by the organization. The HR has to decide on tools and equipment as well as the knowledge that will be required to implement a particular strategy.
Human Resources
HR has to have an immersive role in strategic implementation. Once the planning has taken place HR will be fundamental to understanding the attributes of the workforce which are vital to the company. Here we are referring to the intellectual and productive capacity of the workforce. The HR functions must be properly aligned to successfully implement the strategic plan. Essentially proper balance has to be created through HR to support strategy implementation.