One of the most requested topics is strategy. The problem is, how to encompass all the aspects of good strategic planning. So I won’t, instead, here is a crash course in the strategic method – not specific details on strategy. Business strategy has three distinct parts:
- Building a Strategic Plan
- Evaluating the Strategic Plan
- Keys to Successfully Executing Strategy
Step 1: Building a Strategic Plan
The strategic plan outlines the direction, decision making, and allocation of resources (capital and human capital) within an organization to reach its goals. While there are a variety of programs and systems to creating a strategic plan, the plan usually clarifies three main points:
- What do we do?
- Who are our key customers?
- How do we excel? (What do we do that differentiates us from our competition)
For an HR department, these might be:
- Managing and investing in our human capital to improve business results.
- In order of priority: the organization’s executives, managers and employees.
- In HR this is based on the needs of the organization, maybe it is recruitment, knowledge management, leadership development, or changing the organization’s culture. Whatever you choose, it needs to support the organizations goals, and solve their issues.
The best strategic plans use dynamic and outside-the-box strategic thinking supported by rigorous analysis. The result is a formalized plan with measurable outputs. It will clarify the key focuses of the organization or department (3-5) for the next couple years, and then identify what tasks need to be completed this year to meet those goals. Measurable goals and outcomes being attached to all main goals. According to research by the Corporate Executive Board, most strategic plans are only good for 10 months after completion. So review yours annually.
Tips for doing it really well: Get a diversity of perspectives in the process, encourage open dialogue, don’t bury contentious items – discussion improves the plan, and lastly ensure a careful and accurate assessment of the capabilities (only a few) that allows your firm to operate better than your competition.
Step 2: Evaluating Strategic the Plan
This is the shortest step, but arguably the most important in any strategic planning process. This is the point where you step back and evaluate if your plan is realistic, achievable or even aligned with your organization.
- Is it realistic? If your company is a new entrant to an established market with an undifferentiated product are you really going to be able to become a major player in one or two years? No…then go back and revise the plan. Were you a top-down bureaucratic, autocratic organization moving to a flat, collaborative structure? Is that change even possible in a year? Unlikely, go back and re-evaluate your goals and implementation schedule.
- Does the strategic allocation of resources match your budget? If the budget says 95% of spending will be on HR generalist activities, but your strategic plan says succession planning is the most important then you’re setting off for failure from day 1.
- Does this plan create value? And not just intangible value, value in the financial sense. Far too often HR will make decisions on instinct, and personal opinion. Will this lower costs, improve sales, or help in creating new products? Remember, to be a business partner we need to add value to the business. As Nanette Nerland once wrote, “at the end of the day we are business advocates with a people focus.”
- What is the Risk vs. Reward balance? If it is a lot of risk for little reward, we don’t do it. If there is a lot of reward for little risk…is that realistic?
- Do we have the right people right now in our organization to carry out the plan? If not, go back (or rapidly hire the people if they are available, just make sure that is listed as part of the strategic plan’s goals).
Step 3: Executing Strategy
Many people regard execution as detail work that’s beneath the dignity of a business leader. That’s wrong. To the contrary, it’s a leader’s most important job. After a thirty-four-year career at General Electric, I was named AlliedSignal’s CEO. I was accustomed to an organization that got things done, where people met their commitments. I took execution for granted. So it was a shock when I got to AlliedSignal. The company had lots of hardworking, bright people, but they weren’t effective, and they didn’t place a premium on getting things done. ~ Larry Bossidy
I think the above quote sums up the importance of execution quite nicely. It’s from a book entitled Execution, by Larry Bossidy and Ram Charan.
For an organization to execute a strategic plan there needs to be a few key supports, and HR can really help in this area:
- Performance Management and Accountability – reward those who execute, coach those who miss, and fire those who continually miss.
- Clarify decision rights (who, when, what, how).
- Ensure fast and timely information flow (all directions, top-down, bottom-up and across silos),
- Organizational Structure (see more on organizational design)
- Motivators (employee engagement and motivation)
If these components are all setup and in alignment, they will help to develop the culture of execution that will ultimately support the strategic plan in becoming a reality.
Following these steps to build, evaluate and execute your next strategic plan is the key to a competitive organization. I look forward to writing more on this in the future, as I’m sure strategy will continue to remain a popular request.
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