Effective Human Resources Planning

As we approach the end of the calendar year, many businesses are taking stock of 2007 – their successes, their failures, their strengths, and where they need to grow – so that they can prepare for 2008. Just as many other businesses are engaged in the day-to-day details of running a business, and are just trying to stay on top of the issues from today. Whether you fall into the first category or the second, or are trying to do both, strategic planning is an essential piece of moving your business beyond survival mode and into thriving and growth mode.

The first step for any business owner is to assemble your team of advisors. Most people start businesses because they have an interest or skill in that particular field or see a need to be met, not because they really want to meet the many stringent laws and regulations that govern business in California. However, as a business owner, you do inevitably find yourself having to face those issues, and the competition for your time begins. Do you spend your time growing your business? Or do you spend your time making sure you’re in compliance and trying to be all things to all people?

The successful business owners who have moved their businesses out of the status quo and into growth know that the key to success is assembling a strong team. Depending on the size of your business, this may be an internal team, with your C-suite, or it may be external, with your attorney, CPA, insurance broker, and HR team if you outsource. Find the people who understand your business, who specialize in their fields, and who come highly recommended. With this team in your corner, you’re ready to go to work in the actual planning process for your next year.

HR planning often uses staffing as a starting point. The three essential questions you want to ask are:

  • Do I have the right people? (Do we have the people with the skills and knowledge to meet the firm’s goals?)
  • Do I have the right people in the right places? (Are we using everyone as effectively and efficiently as possible?)
  • Do I have people doing the right things? (Are we meeting our sales goals? Are we meeting our benchmarks for customer satisfaction, quality, growth etc.?)

In a recent landmark survey conducted by Gevity Institute in association with Cornell University , it was found that all three of the above factors are necessary, and there is also “a clear correlation between employee management practices, alignment, and company success.” Some HR practices are more effective than others, researchers found: The best retention practice is creating a family-like workplace where company information is shared with employees, social events bring people together, and new hires get a comprehensive orientation program. The study showed that firms should be future-oriented when recruiting, bringing in talent tailored to long-term contributions, and use formal HR processes and professional standards to manage people.

In the other phases of research on the impact of good employee management practices on profitability, Gevity and Cornell surveyed employees as well as owners and HR managers. Phase three showed that the most important employee “outcomes”–results of good HR practices–for revenue and profit growth are involvement and low intentions to leave a company:

  • Customer satisfaction is raised by employees who are committed to their supervisors, trust their management, and cooperate with their co-workers.
  • Trust in management is the biggest driver of product or server quality.
  • Successful development of new products or services depends on the same three factors as high customer satisfaction.

The research produced strong, measurable evidence. Rates of increase in revenue and profit and reductions in turnover were even greater for firms with high growth or fierce competition and also for larger firms. Here are three key strategies:

  • Select employees based on how they fit the organizational culture rather than for skills to fit a particular job.
  • Use a self-management strategy with employees rather than a controlling management style: Grant discretion and foster trust and empowerment.
  • Motivated and retain by implementing a family-like community.

The motivation/retention strategy was most effective in both growing profit and reducing turnover. The self-management strategy increased revenue most effectively. But using all three strategies had the best results: Revenue up by 22.1 percent, profit up by 23.3 percent, and turnover reduced by 66.8 percent in the companies studied.

Author: Reed Jorgensen, SPHR, HR Manager, Your People Professionals

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