Managing Human

Resources
Strategically
Christopher Orpen

The State of Strategic Human (2) such strategic planning typically
Resource Planning occurs in isolation from what is
Over the past decade it has become done elsewhere in companies; and
(3) human resource strategies are
increasingly clear that strategic human
seldom developed because of their
resource planning is needed for
capacity to advance company-wide
employees to contribute fully to the
success of their companies. As recent goals, but rather because they
reviews have made clear, whereas this happen to satisfy the interests of
message appears to have been accepted, particular persons in the company.
the practice of planning strategically for Why have companies been so slow to
one's human resources is still in its develop and implement effective
infancy. For instance, these surveys strategic plans for their human
have shown that a majority of the resources, even though they say they
managers surveyed in large and small believe in them? Several possible
companies agree about the desirability explanations exist. First, many firms
of strategic human resource planning appear to lack the expertise to formulate
[1,2]. However, under half of these and then implement strategic human
managers said they actually prepared resource plans[3,4]. They do not have
formal human resource plans for their the human resource managers with the
companies, with an even smaller knowledge or power within the firm to
number being able to produce such ensure that the firm as a whole adopts a
plans when asked. Moreover, only 15 to strategic approach to their human
20 per cent of the companies in the resources. Second, planning for human
surveys employed strategic plans for resources is intrinsically more difficult
their human resources that the than that for capital and financial
researchers felt were both "compre- resources, where significant
hensive" and "integrated" with the improvements have been made
companies' overall objectives and recently[5]. In many cases, human
strategies. resource planning is still little more
Despite these results, most of the than "employment planning", charac-
managers in these surveys believed, terized by the extrapolation of future
from their own experiences (admittedly human resource needs from the size of
the existing workforce without taking
rather limited in many cases) that
account of the strategic objectives of
strategic human resource planning had
the company. Third, in many
produced benefits for their companies
companies, despite contrary claims
in the form of cost savings, greater from some managers, employees are
employee morale, better productivity still regarded as an expense, rather than
and lower turnover. Although they as an investment that needs to be
admitted to not being able to prove it, strategically managed, like any other
the managers also felt that such resource. Most well managed com-
planning had contributed to better panies routinely apply "return on
overall company performance.
investments" criteria to financial and
Summing up their survey results, the material resources, but fail to do so for
researchers argued they showed that:
their human resources[3]. Finally,
(1) formal human resource strategic managers are often unaware of what is
planning is still in its infancy; involved in human resource planning,
of the precise steps they need to take to
make such planning effective. This
article aims to improve their awareness,
by presenting a working framework for
human resource strategy that can easily
be followed.
The Nature of Strategic
Human Resource Planning
The two essential elements of strategic
resource planning that need to be
clearly distinguished are goals or
objectives, and the means for achieving
them. Conceptually, planning for
human resources consists of four
distinct, yet related, activities:
establishing objectives, developing
appropriate strategies, formulating
specific human resource programmes
for implementing these strategies, and
evaluating strategies in the light of
established objectives. At the strategic
level, there are three main questions
that need to be addressed in human
resource planning:
(1) What kinds of employees will the
company require in three to five
years time, to meet its strategic
objectives?
(2) How should employees of such
kinds be managed to assist the
company to reach its three- to five-
year objectives, what specific
human resource strategies and
programmes are needed for this?
(3) How can these programmes and
strategies be designed to deal
effectively with the opportunities
and threats that inform the
company's strategic objectives?
According to the scheme proposed in
this article, there are seven elements to
comprehensive and integrated strategic
human resource planning that seeks to
answer these key questions (see Figure
1).

Work Study, Vol 42 No. 5, 1993, pp. 15-17, © MCB University Press, 0043-8022 WS July/August, 1993 15
 Analysing the Environment
In this first stage, future changes in the
environment that could impact on
human resources and how they should
be managed, must be identified, and
their likelihood estimated. Even if the
changes are difficult to predict,
companies should not avoid making the
forecasting efforts involved. Only if
opportunities and threats are correctly
anticipated, can companies have
appropriate human resource strategies
and programmes available, when and
where they are needed. An accurate and
timely environmental analysis is
required, if companies are to avoid
being simply reactive in their man-
agement of human resources to events
as they occur.
It is usually advisable to formalize
this process, rather than just hoping it
will happen. Some companies have
established small committees that meet
regularly, whose specific task is to
identify environmental changes that
may affect human resources and to
devise ways of meeting these changes.
Others have task forces drawn from
relevant parts of the company which
devise environmental scenarios on a
regular basis, from which they prepare
reports for action by managers
throughout the company. In some small
companies, a senior manager is
delegated the task of environmental
analysis for human resources, and
briefs the directors on the implications
of his or her findings for company
planning. Whatever scheme is adopted,
the important requirement is that data
are systematically and regularly
collected, and summarized in a manner
that is meaningful to those who are
involved in strategic human resource
planning.
Developing Company
Objectives
Human resource objectives, and the
strategies for realizing them, are
derived from overall company
objectives and strategies. They do not
stand on their own, but exist to help the
company achieve the goals that are
important to it as a whole. However,
human resource choices also affect
company-wide objectives, sometimes
constraining them, at other times
extending them beyond what they were
originally. For instance, alterations in
business direction may necessitate
changes in the kinds of employees
required and hence in personnel
management. However, the strategic
decisions of a company may be
restricted by human resource
16 Work Study
considerations, such as the availability
and cost of the requisite employees.
Alternatively, the human resource
forecast may suggest things that widen
a company's strategic options, perhaps
identifying new markets that can be
exploited by the changed workforce.
Irrespective of how it is done, human
resource objectives and strategies must
be closely integrated with those for the
company as a whole. The human
resource policies and programmes of a
company should be directly linked to its
overall objectives, and only followed
because they help the company achieve
these objectives, something that many
personnel managers still overlook[4]. In
a major survey, Dyer[6] found that
firms which have successfully linked
company and human resource planning
have typically employed one or more of
three strategies. Some firms have
established planning committees
throughout the firm comprising line
managers, personnel managers and
planning executives, to assess the
significance of future events for both
the company and its human resources.
In other firms, strategic human resource
issues are examined by the personnel
department, whose recommendations
are then sent to senior managers for
incorporation into company-wide
plans. Finally, as part of the planning
process, other firms require company
planners to inform personnel managers
of their plans, and to modify them in the
light of suggestions from the personnel
managers.
Analysing Human Resources
Having established company objectives
(appropriate for capitalizing on the
opportunities and warding off the
threats revealed in the environmental
analysis), the next stage is to analyse
the company's human resource
strengths and weaknesses. Only if the
company's human resource strengths
are known, is it possible to devise
company-wide strategies which can
exploit environmental opportunities.
Likewise, strategies for countering
environmental threats are unlikely to be
successful if they are based on human
resource weaknesses.
There are two aspects to this stage of
strategic human resource analyses
which should be distinguished. First,
there needs to be an investigation of
organizational (macro) level variables
which affect the quality of human
resources, such as company climate and
structure, supervision, absenteeism and
turnover in different parts of the
company, conflict and co-operation
between departments, and career
opportunities in the company. Second,
at the individual (micro) level, there
must be an analysis of current
employees, their numbers, work
attributes, and job attitudes, as well as
their present and potential per-
formances. The data provide a human
resource base-line, for assessing future
requirements. Together, the information
from these analyses provides the sort of
"picture" of the company's current
human resources, which is needed for
most company-wide strategic plans if
they are to be effective, especially in
supplying the various kinds of
employees which are required.
Forecasting Human Resource
Needs
A strategic perspective requires a
forecast of future human resource
needs, an estimate of how many
employees of different kinds will be
needed in the future if the company is to
realize its objectives. This estimate
should be both qualitative and quan-
titative. Qualitatively, the company
must know what mixture of employee
competencies and attitudes will be
required in the future, if the company is
to cope successfully with changes in
markets, technology, competitive
conditions, and in the economies within
which they operate. When quantitative
forecasts are necessary, they should
extend beyond the simple projection of
staffing needs from current levels, that
is still frequently the rule[5].
Forecasting human resource needs must
predict how future company strategies
will impact on the number and kind of
employees needed, not be restricted to
supplying replacements for existing
employees who are likely to leave in the
planning period.
Developing Human Resource
Objectives
The first step here is to compare the
likely demand for human resources of
various kinds with what is currently
available, both internally and
externally. Data about both these
aspects should have been provided from
earlier stages in the strategic planning
process. Besides indicating whether
there is likely to be a "surplus" or
"deficiency", these analyses should
have suggested ways of either dealing
with the surplus or of overcoming the
deficiency. These now need to be
formalized as human resource
objectives that all the managers
involved can understand, both for
themselves and for their significance of
the company-wide objectives. Research
has shown that such objectives are
likely to be more effective, if they:
(1) are as specific as possible;
(2) consistent with company aims and
goals;
(3) appropriate in terms of human
resource strengths and weaknesses
of the company;
(4) acceptable to those responsible for
attaining the objectives; and
(5) have been set participatively with
these members of the company,
rather than unilaterally imposed on
them[5].
Developing Human Resource
Strategies
In this separate step, those in the
company in charge of personnel should
develop - and execute - strategies for
realizing these human resource
objectives. Specifically, a number of
recruitment, selection, retention,
appraisal, promotion, training and
development, discipline, job design,
and reward strategies must be agreed on
and put into effect. It is critical that
these functional activities or strategies
are fully understood by those involved,
are integrated with each other, and form
part of the company's overall strategic
objectives. Too often these functional
activities are developed in isolation
from the rest of the company and have
goals that are not fully appreciated by
the employees affected by them[3].
Analysing the Effect of
Human Resource Strategies
The final, but frequently overlooked,
stage of human resource strategic
planning is to demonstrate what effects
the executed strategies have on
company performance. No matter the
difficulties involved, every strategic
plan should be formally and regularly
reviewed for its consequences for the
company as a whole. After all, the aim
of the planning process is to help the
company achieve its objectives, not to
satisfy the interests of personnel
managers or of some employees.
Ideally, evaluation and review pro-
cedures should be decided on in
advance as part of planning process, not
something done after the event merely
to satisfy critics or to justify what has
been done to oneself.
According to Dyer[6], such reviews
should include a comparison of:
(1) current employee productivity
against established targets;
(2) actual staffing requirements versus
requirements;
(3) employee qualifications in relation
to those desired;
(4) actual personnel flows (turnovers,
absenteeism, promotions) versus
desired rates;
(5) implemented functional prog-
rammes (selection, training and
development, appraisal, job
evaluation, reward systems, etc.)
against planned programmes;
(6) actual versus budgeted costs of
functional programmes; and
(7) results or benefits of programmes
versus their actual costs.
Even if not all of these evaluative
comparisons are feasible, there must be
some means of demonstrating how
strategic human resource planning
contributes to overall company
performance. Finally, as indicated in the
figure, the results of this review "feed
back" to affect subsequent planning,
either confirming the correctness of
what was done or suggesting changes
that are necessary next time.
Conclusion
In this article I have set forth a
framework for strategic human
resource planning, which indicates
what things need to be done and in what
order. Even though there may be
circumstances when deviations from
the model are justified, the central point
remains: that human resource planning
is essential for company success and
needs to be done carefully and
systematically, guided by a model of
some kind. It is not something that is
expensive or difficult to do, although
some expertise in human resources is
clearly necessary. On the contrary,
although effort is needed, what is
involved is straightforward, once it is
accepted that most of the data are
necessarily judgemental rather than
objective, consisting of the "best
guesses" of the managers concerned in
most cases. The time is overdue for
companies to adopt the same sort of
strategic approach to their human
resources closely linked to company
objectives, as many have adopted for
their other resources. Companies
cannot hope to be successful if their
strategic planning neglects their most
important resource — the people who
work for them.
References
1. Miller, E.L. and Burack, E.H., "A Status
Report on Human Resource Planning
from the Perspective of Human
Resource Planners", Human Resource
Planning, Vol. 4, 1991, pp. 33-40.
2. Nkomo, S.M., "Prescription versus
practice: The State of Human Resource
Planning in United States Companies",
Southern Management Association
Proceedings, 1990, pp. 55-78.
3. Walker, J., Human Resource Planning.
McGraw-Hill, New York, 1989.
4. Skinner, W., "Big Hat, No Cattle;
Managing Human Resources", Harvard
Business Review, Vol. 56, 1981, pp. 34-
56.
5. DeVanna, M.A., Forbrum C. and Tichy,
N., "Human Resource Management; A
Strategic Perspective", Organization
Dynamics, Vol. 23, 1981, pp. 34-47.
6. Dyer, L., "Human Resource Planning",
in Rowland, K. and Ferris, G. (Eds),
Personnel Management. Allyn and
Bacon, Boston, MA, 1989, pp. 52-77.
Christopher Orpen is at Bournemouth
University, UK.
WS July/August 1993 17