Building a Strategic Human Resources Plan

Why is it worthwhile to build an HR plan, and what does a strategic HR plan mean?

We can view the role of the HR team through the lens of organizational effectiveness. I believe that a key function of HR is to enable the company and its employees to perform at their best. When individuals perform at their best, the company can thrive. To help individuals and teams reach their full potential, we need a plan—one that considers the business context. For example, performing at your best in the face of an innovation challenge is different from doing so during a global pandemic or when addressing operational efficiency challenges.

Such a plan allows us to precisely identify the skills and qualities required to ensure the organization performs at its best. Finally, it packages all these elements into concrete goals, clear responsibilities, and timelines.

A strategic plan supports the primary role of the HR team, which is to enable the organization to perform at its best

What Are the Key Elements of a Strong HR Plan?

One of the main keys to a strong HR plan is ensuring it aligns with and supports the company’s business initiatives. For instance, the company’s growth targets will influence the need to recruit new employees and expand into new territories worldwide. Introducing a new product or technology will necessitate the development of a new set of skills and expertise. A merger or acquisition may present challenges related to team motivation or the composition of the senior management team.

How Do We Access This Crucial Business Information?

How can we participate in discussions that translate these business initiatives into organizational implications? A strong partnership with company leadership is essential to “avoid surprises” and to enable proactive responses to business plans.

In many companies, strategic discussions take place every few months. It’s important to come prepared for these discussions with organizational solutions or relevant questions that support the business strategy. If such discussions are not held or if you are not part of them, make it a point to interview the CEO or CFO periodically to stay informed about the company’s new directions.

Beyond Business Initiatives

In addition to aligning with business plans, it’s critical to consider the main characteristics and shifts in the business environment. This includes:

• Competition for Talent: Understanding talent market dynamics in your field, including salary levels across various territories.

• Regulations: Monitoring labor laws and compliance requirements in the regions where you operate.

• Economic Conditions: Evaluating the broader economic landscape in relevant markets.

By integrating these elements, the HR plan becomes a robust framework that not only supports business goals but also addresses external challenges and opportunities effectively.

The Importance of Looking back

An interesting phenomenon I’ve observed in recent years, particularly in startups, is that many companies tend to "skip" the step of looking back to evaluate what was achieved and what wasn’t. While focusing on the future and looking ahead is commendable, there’s great value in reflecting on the past.

This reflection is a wonderful opportunity to celebrate and acknowledge the achievements—both our own and those of others—that were accomplished through thoughtful planning and effort. Such recognition acts as a “motivation booster” for moving forward. During challenging times, like the current period, expressions of appreciation and gratitude create meaning, strengthen employees’ connection to the company, and reduce burnout.

Additionally, reflection offers a chance for learning and continuous improvement. Finally, it helps us strike a better balance in our planning, ensuring that our goals are both ambitious and realistic. 

Is it possible to crystallize the central theme of the upcoming period?

A "central theme" for the next 6–9 months serves as a narrative that helps focus our efforts and provides clarity for the team about what is most important right now.

For instance, a startup expected to triple its revenue in the coming year might double its workforce and expand its global office presence. Its central focus would revolve around recruiting, onboarding, and maintaining its unique culture amidst rapid growth.

In the case of acquiring another company, the central theme might center on change management, including organizational communication, process integration, and supporting individuals through career transitions. Other examples of central themes could include a company transitioning its business model from B2C to B2B, adapting its platform for cloud-based operations, or restructuring from a project-based to a discipline-based framework.

During this period, any central theme will likely intersect with the impacts of COVID-19, addressing questions such as:

• "How do we maintain employee engagement when the 'new normal' is reshaping every stage of the employee lifecycle?"

• "How do we continue nurturing our organizational culture in a world without traditional office spaces?"

Such themes not only guide strategic priorities but also align teams around shared goals during transformative times. 

Out of all the possible actions we could take, how do we choose the most important ones?

After all, every idea that comes up contributes, to some extent, to what the company needs from us. For example, if we aim to support rapid growth, it’s crucial to enhance the hiring process, provide more guidance to managers during interviews, launch a new “employee referral” campaign, or even invest in onboarding and leadership development (especially for managers about to double the size of their teams).

Simple prioritization tools can be incredibly helpful in this process, such as a 2x2 matrix of impact and effort (see illustration below). Initiatives with low impact (value) won’t effectively address the organizational needs for skills, capabilities, or cultural adjustments required for the company to thrive.

It’s also essential to recognize that needs and priorities evolve over time. That’s why it’s critical to periodically "step back and observe," reassess priorities, and make adjustments as necessary.

After selecting our primary focus areas based on the company's business plan and the maximum impact we can create, we move on to the next step: looking inward at our tools and capabilities as individuals or as an HR team.

Let’s assume you're facing a significant challenge related to employee retention in a risky or uncertain business environment. One way to address this challenge is by offering an exclusive program for your top talent. Alternatively, you could strengthen the capabilities of managers within the company to better develop and retain their teams. Another approach might be for the HR manager to dedicate significant time to having conversations with employees, identifying and addressing their expectations and frustrations.

Here’s another example: Let’s say leadership has identified a need to cultivate a higher level of determination and a stronger sense of urgency within the organization. This could be addressed with a communication plan that “brings” employees closer to the business challenges. An alternative response might be a company-wide recognition program for those who have excelled in these areas or adjusting the feedback process, such as moving from annual to quarterly reviews.

The most effective solutions are those that align with your organizational culture and those that allow you to perform at your best

I will propose two parameters for selecting the right solution for you:

First, avoid "off-the-shelf solutions" such as generic training or leadership development programs. Instead, create a solution tailored to your organization's unique culture. For instance, a prestigious program for the top 10% of your talent is fundamentally different (not just in terms of cost) from a personalized response provided by the HR manager.

Second, choose solutions where you, as individuals or as a group, will be at your best. If you enjoy facilitating a group, leading a course, or working one-on-one, this is definitely a relevant factor when selecting the solution—provided it serves the overall goal. 

“Without data, you’re just another person with an opinion”, Deming

In the next step, we translate our solutions into measurable objectives. It’s essential to provide data on the existing parameters and how we want to improve them. For example, if we want to accelerate the pace of employee recruitment, we need to show how we measure Time to Hire. If we commit to improving employee retention, we must show what the retention rate has been over the last two years.

Remember, our partners, the managers within the organization, make extensive use of data, so it’s crucial to "speak the same language" and provide automated tools for measurement and tracking.

More and more companies are using Objectives and Key Results (OKR's) (see table below), a methodology developed at Intel and popularized by Google. This method offers several advantages, including transparency—the goals are visible to all employees within the company, fostering more productive collaboration—and frequent updates—goals are reviewed quarterly.

Moreover, the "movement of goals" isn’t just top-down (from management to employees), but also bottom-up. The process of setting objectives encourages initiative at all levels of the organization. 

A parallel and highly effective tool was developed at Salesforce by Marc Benioff in the company’s early days. V2MOM starts with the vision—what you want to achieve this year—then moves to core values, followed by tools, constraints, and finally, the measuring method.

V2MOM is a method that helps clarify not only what you want to accomplish but also the process and parameters by which success will be measured, ensuring alignment across teams and providing a clear path to achieving your objectives.

Agile HR?

As we all know, innovation is a central factor for business success, and one of the ways to achieve it within organizations is by incorporating agile work methods. Working in "sprints" of ten days or two weeks allows for continuous learning and frequent course corrections to improve product performance and adapt it to the ever-changing demands created by the market. There’s no reason these innovative methods should be excluded from HR.

The traditional approach involves a long process that includes research, development, approval at all management levels, and full-scale implementation across the organization. A more agile method would focus on a smaller-scale implementation (not the full solution, and not across the entire organization), and based on "product performance," it would be refined and continue through the implementation process.

For example, if we’re developing a "personal development plan" tool for employees, we can start with one of the software teams, present a basic tool (a form + training for employees and managers), and gather feedback. In later stages, we can expand the program to additional teams and add more features, such as a supportive online system or organization-wide development tools (like mentoring). 

What is the optimal frequency for reviewing and updating the plan?

The answer should obviously relate to the entire organization. There’s no doubt that an annual resolution is no longer relevant. Many companies that have adopted OKRs aim for a quarterly frequency. Some even ensure that their plans are updated monthly. In terms of a “business theme,” as discussed here, we wouldn’t expect the organization’s central business theme to change every month. However, the current business environment is so dynamic that it makes perfect sense to refresh the plan monthly, or at least quarterly. A deeper and more strategic review, as suggested here, should be done annually.

Good luck!