This week, I’m introducing the second step of developing an HR Strategic Plan. This is the step where both internal and external environmental scans must be conducted in order to identify and interpret the data that pertains to opportunities and threats in the organization’s business environment.
Being able to identify and understand these threats is essential in developing an effective strategic plan. The two types of scans are defined below:
The first is the internal scan which identifies internal organizational trends as well as the physical, financial, and human assets and determines whether these trends and assets are strengths or weaknesses.
Examples of what to examine in an internal scan include employee interaction with each other, employee interaction with management, manager interaction with each other, management interaction with shareholders/owners, access to resources, brand awareness, organizational structure, individual and core competencies, innovation capabilities, operational potential, etc.
The second is the external scan which identifies and analyzes the external environment in order to anticipate and identify trends, opportunities and threats to the organization.
I recommend three environments that should be scanned and analyzed.
- The organization’s industry environment. Examine the competitive structure of the organization’s industry. Take a good look at the competitive position of the organization as it relates to its top competitors. The industry’s history, life cycle stage, and dynamics must be carefully assessed including how globalization is affecting the competitive environment.
- The national environment. Examine the whether the organization’s national/local framework is capable of being competitive in the national and global environment.
- The broader socio-economic environment. Explore the macro-economic, social, government, legal, technological and global factors that may influence the organization’s competitive environment.
Understanding what we are scanning and gathering data on, next we’ll take a look on how go about collecting that data.
- Annual Reports
- Business Unit strategic plans
- Marketing materials
- Employee surveys
- Staffing Plans
- HR and training staff
- Employee exit interviews
- Conversations with leadership team
- Org charts
- The DOL Bureau of Labor Statistics
- The US Dept. of Commerce Bureau of Economic Analysis
- State and local Depts of Labor, Commerce, or Business Development
- State and local employment regulations
- National news
- Customer surveys
- Customer focus groups
- Partner surveys
As I alluded to earlier, the main purpose of the scans is to identify and evaluate the organization’s strengths and weaknesses.
The first element to assessing the organization’s strengths and weaknesses are the competencies that are necessary for the organization to be successful in executing its strategy. The people of the organization are the critical link between the business strategy and the results.
There are specific competencies and behaviors that are needed to successfully implement a strategy within its environment. For example, significantly different competencies are needed for a cost strategy vs a service strategy.
The next element to consider when evaluating the strengths and weaknesses is to analyze the organization’s various management practices. Determine whether the management practices are logically related to each other and capable of producing the critical competencies needed to effectively implement the strategy.
A thorough HR Department assessment must also be conducted. Take a cold hard look at the organizational structure of the HR department and the skill levels of the staff. In addition, analyze and evaluate whether the right processes and systems are in place.
The HR Department needs to know how it will make a contribution to the organization’s business, have the right org structure, have the right systems and processes in place, understand the department’s strengths and weaknesses, how the department is perceived by leadership and employees, and have a plan in place to capitalize on staff strengths and address staff weaknesses.
Strategic HR is all about the relationship between HR leadership and the organization’s business unit leadership. It’s about delivering real business value to all functions of the organization. HR has to be thoroughly involved with all aspects of the business in order to fully understand and appreciate the opportunities and problems the organization and business units deal with every day.
To be taken seriously by the organization’s leadership, strategic HR professionals need to be great business professionals. They should have actual business leadership experience outside of HR, in my opinion. In addition, they should put themselves in positions where they regularly work with key influencers, identify opportunities and provide solutions to business problems, facilitate key meetings, be members of leadership teams, etc.