Strategic planning is the process of defining organizational strategy, or direction, and allocating resources (capital and people) toward its achievement. Effective strategy often relies on managers who are willing to closely assess current conditions and develop a game plan that enables the firm to overcome obstacles and sustain success.
Strategic HR management refers to the appropriate use of HR management practices to gain or keep a competitive advantage. An important way HR professionals can contribute to strategy is by introducing high-performance approaches into the workplace that lead to increased performance.
Forecasting uses information from the past and present to predict future conditions. Positive HR planning can be a source of competitive advantage for organizations. This is true because planning helps companies identify their future needs and how to get the right employees to satisfy these needs, thus making the hiring process more efficient.
HR metrics are specific measures of HR practices. Unlike financial reporting, there is not yet a standard for the implementation and reporting of HR measures. Managers choose what and how to report to employees, investors, and other interested parties.
Benchmarking is the process of comparing an organization’s business results to industry standards or best practices. The balanced scorecard is a framework organizations use to report on a diverse set of performance measures.
Results in each of these four areas determine if the organization is progressing toward its strategic objectives. Measuring the benefits of human capital is equally important because it shows how effective HR practices help an organization and its employees.
A variety of financial measures can be assessed to show the contribution human capital makes to organizational results. Without such measures, it would be difficult to know what is going on in the organization, identify performance gaps, and provide feedback. Managers should require the same level of rigor in measuring HR practices as they do for other functions in the organization.