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How to Develop a Strategic Plan for Your Business

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Updated February 2021

Creating a strategic plan for your business or new division is like creating a map for an exciting, but unfamiliar, journey. This map will help to keep you on course if you start going in the wrong direction, but it isn’t so stringent that you can’t check out different roads along the way. As a business owner, I use this process each year during my strategic planning sessions: I map out where I am, where I want to go, and how I think I can get there. During the year, my map is both a guide for what I should be focusing on, as well as a resource to help me “check where I am” whenever I am tempted by something new and different. Sometimes, I rewrite my plan based on unforeseen changes (i.e., technology, COVID, economy, emerging trends), but many times it has helped me realize what is most important for the business and make the right decisions with various opportunities and threats to ensure my long-term goals are met.

There are many formulas or formats used for strategic planning, but for the most part, they cover the same points and reach the same goals. Below is an overview of the process that I use personally, as well as what we use with many of our clients.

How to Complete Internal and External Analysis

Part of mapping out your journey requires you to take a strategic look at your business.  Your first step will be to determine where you are in the market by doing a “SWOT” analysis — identifying your internal Strengths and Weaknesses as well as external Opportunities and Threats.

Internally, this includes assessing both the strengths and weaknesses of your human, financial and technological resources, as well as the culture and values of the organization. The best way to do this is by brainstorming. Create two columns — one for strengths and one for weaknesses — and begin writing down anything that comes to mind as a strength or weakness to your business. For example, one of Strategic HR’s strengths is the “ability to be a change agent — very flexible and adaptable as needed” while a challenge is “managing our team’s growth.”

An external analysis requires you to evaluate what’s going on “outside” your business and how it may affect you. As discussed in Christine Keen’s book, Effective Strategic Planning: A Handbook for Human Resources Professionals, you should consider issues in the following four categories: economic (i.e., unemployment, interest rates, recession), political (i.e., current or pending legislation or court cases), social (i.e., values, lifestyles, and demographics) and technological. For example, from my external analysis, an opportunity was “Volunteer opportunities with complementary organizations” and a potential threat was “Growth of individuals starting to do human resources consulting.”

Gathering this internal and external information will give you a snapshot of where you are now — the starting point on your journey. However, a starting point, by itself, will not enable you to achieve your goals. Like going on a trip, you need both a starting point and a destination. This reminds me of my favorite quote from Alice’s Adventures in Wonderland:

“I just wanted to ask you which way I ought to go?”

“Well, that depends on where you want to get to,” said the Cat.

“It really doesn’t matter…” said Alice.

“Then it really doesn’t matter which way you go,” said the Cat.

Developing Your Vision and Mission

Next, you’ll need to determine your destination — in other words, your Vision or preferred future. A Vision can be summarized in a short statement that is quickly and easily understood by anyone; it describes something different for the organization. As a sample, below is Teach for America’s Vision statement (at one point in time):

“One day, all children in this nation will have the opportunity to attain an excellent education!”

Next, you need to develop your Mission statement or a statement explaining why you exist. Like the Vision, the Mission is also a short statement. But, a Mission statement describes what the organization does which will help it progress toward its ultimate future, the Vision. For example, Tesla’s Mission statement is

“To accelerate the world’s transition to sustainable energy.”

As you begin to develop your Vision and Mission, you will find it easier if you brainstorm again. This time, think about what’s important to you and to your business — who are your customers, what makes you different, how would your clients describe you, what can you contribute or offer to others, what would you like to do or be tomorrow? Developing the Vision and Mission are the most difficult. Initially, this may take a number of rewrites with input from others. For additional examples, check out HubSpot’s 17 Truly Inspiring Vision and Mission Statement Examples. Once you have both the Vision and Mission clearly defined the rest of your plan will fall right into place.

Create Specific and Measurable Objectives

Now to answer Alice’s question to the Cat… Once you know where you are and where you want to go, you can then map the directions for getting there. In other words, you can identify the key objectives that must be met after this planning period to progress toward your Mission and Vision. Generally, your objectives should be specific and measurable. In addition, they need to be ambitious but realistic, and only focused on what needs to be done rather than how. For example, an objective may be:

“Develop a partner program to help grow business referrals.”

Your list of objectives will quickly grow but you have to narrow down the top four or five that help advance your business toward meeting your Vision and provide you with a competitive advantage. If the list is too long, your plan will quickly become a “dead” document rather than a “living” document that you can use and refer to throughout the year.

Develop an Action Plan for How to Meet Each Objective

For each of your objectives, you will then need to create a detailed action plan identifying “how” you will meet the objective. I’ve had the most success with this by completing the following formula for each objective:

Desired Results

  • What are you hoping will happen or your desired result if the objective is met?
  • How will you benefit?

Potential Obstacles / Barriers

  • What might prevent you from completing this objective?

Supports

  • What resources, people, or tools are available to help you with this objective?

Process

  • What steps must we take to achieve this objective?
  • Be specific on each step indicating who will do what and when.

Evaluation

  • How will we know when we’ve successfully met this objective?

This may seem like a lot of work for each objective, but if you map out the answer to all five of these steps, you will have a very clear and unquestioned plan for how your objectives will be met.

Implementation and Evaluation of Your Business Strategic Plan

The hardest step in this process is the next one — implementation! Don’t let yourself do all of this planning and throw the end product on the shelf until next year. If you do, where will you be at the same time the following year? Will you be any closer to your preferred future? (Hint — the answer is no!)

To help ensure that you are proactively working toward these goals, you need to check back on your business plan often — at least quarterly or when anything significant happens to change your plan (i.e., pandemic, economic shift). Has anything changed? Are you on target? Do you need to modify any of the plans? The strategic plan for your business is a living document, so it may change; this is okay as long as you are aware of the changes and make them yourself rather than them being made for you.

Developing a strategic plan for your business isn’t an easy process and can be extremely exhausting. But, if you create an effective and realistic strategic plan for your business, you will begin to focus resources today toward meeting your goals for tomorrow. Plus, you will have a tool to help you minimize the threats and maximize the opportunities. One of the most important benefits of effective strategic planning is that it provides you with a fresh start by clarifying where you are, where you are going, and how you are going to get there. You should re-evaluate your strategic plan on an annual basis using a planning horizon between 2-5 years. Each year, you may find that a great deal changes but your preferred future will stay status-quo until you reach it – and you will!

Author: Robin Throckmorton, MA, SPHR, SHRM-SCP, President of Strategic HR If this article inspired questions for you, Robin can be reached at Robin@strategicHRinc.com.

Need help tackling your HR Strategy for the rest of the year? Let our team of HR experts assist in laying out your road map. Please visit our HR Strategy page, or simply contact us – we’d love to hear from you.

Clark Schaefer Strategic HR's wheel of HR Services, including HR Strategy, Recruitment, Training & Development, Benefits & Compensation, Communications, Employee Relations, Recordkeeping, and Health, Safety & Security

Strategic HR Management

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Question:

What should we be doing differently, as a small/medium-sized business, to strategically manage our HR function?

Answer:

No matter what the size of your organization, it is important for the Human Resources function to be strategically aligned with the business goals and strategies of the company.

To start, you need to understand the purpose HR serves to the organization. Regardless of whether an individual handles HR as part of their other duties, you have a one person HR department or a full HR team, the purpose of HR will need to be defined specifically for your organization. Does HR exist to administratively process paperwork and track employees? Is it to enforce rules and manage employee relations? Or maybe it is to be a coach or advisor to the company on employee and management issues. Whether it is a task-based role or a strategic role, it is important to determine this purpose.

Next, evaluate company goals to determine how HR will align with them. If the company doesn’t have a formal plan or set goals, there are likely some key objectives that the organization is striving to reach – i.e. sales, profit, growth. For HR to be more strategic, determine how HR can support these objectives. For example, if a goal is to increase sales by 10% this year, the HR function might want to consider internal goals such as:

  • Reviewing the compensation of sales (and other staff) to ensure compensation provides the right incentive to meet sales goal;
  • Developing the necessary training for the (sales) team to be sure they have the skill set and knowledge to successfully sell the product or service;
  • Evaluating the (sales) team to determine if the right staff exists to meet goals, or, if you happen to be short staffed, based on productivity results;
  • Ensuring clear expectations are set with the (sales) team including measures that will be used to evaluate performance.

This is just an example, but gives an idea of the type of thinking that takes place in order for HR to be a strategic solution for the company.

Working strategically, and formulating a plan to guide the HR function in a more strategic direction, does take time to implement on top of an already full plate. So, how to start:

  • Shuffle priorities – is there something you are doing that could be delegated or outsourced to free up time to work on strategy?
  • Identify subject matter experts – are there others in the organization that have the expertise needed/have an interest in developing by working on a special project?
  • Assemble a team – can the strategic goals be met with a team effort rather than by one person?
  • Use an outside expert – do you need to outsource the project (to someone like Strategic HR) to get the project done in a timely manner with the right expertise?

Once the HR function has its’ goals clearly defined in conjunction with the corporate strategy it will be easier to identify areas in which HR needs to make adjustments to be more strategically aligned with the organization and with the leadership team. As with the organizational strategic plan, the HR strategy will need to be revisited and revised periodically to address changes in the organization and the goals of the company.

Are daily HR issues interfering with your ability to focus on the strategic matters of your company? Do you find yourself at odds with the directives of the leadership team? Strategic HR knows how integral human resources is to the health of your organization and can assist you with HR strategy needs. Visit our HR Strategy page to learn how we can assist you with your strategy and help align your goals.