Strategic HR Planning: The Missing Piece in Your 2025 Business Strategy

Strategy season is here. This is the time of year when executives and boards analyse their 2024 performance, examine the current environment and make forecasts for the next fiscal year and what is needed to achieve their goals. Strategic HR Planning should be an important part of the conversation as it addresses the HR policies and activities needed to produce the employee competencies and behaviours that will equip the business to meet its strategic imperatives. Presently, a huge challenge that companies globally are facing is finding the right people. The traditional reactive approach no longer works. In an article published in the Jamaica Observer about the fierce fight for talent, Anthony Chang, head of Consolidated Baking Company captured it best by stating,

“𝐌𝐚𝐧𝐲 𝐨𝐟 𝐲𝐨𝐮 𝐰𝐨𝐮𝐥𝐝 𝐤𝐧𝐨𝐰 𝐭𝐡𝐚𝐭 𝐚𝐥𝐥 𝐨𝐟 𝐮𝐬 𝐚𝐫𝐞 𝐜𝐨𝐦𝐩𝐞𝐭𝐢𝐧𝐠 𝐟𝐨𝐫 𝐭𝐡𝐞 𝐬𝐚𝐦𝐞 𝐩𝐨𝐨𝐥 𝐨𝐟 𝐩𝐞𝐨𝐩𝐥𝐞, 𝐚𝐧𝐝 𝐢𝐟 𝐲𝐨𝐮 𝐥𝐨𝐨𝐤 𝐚𝐭 𝐮𝐧𝐞𝐦𝐩𝐥𝐨𝐲𝐦𝐞𝐧𝐭, 𝐢𝐭 𝐡𝐚𝐬 𝐠𝐨𝐧𝐞 𝐝𝐨𝐰𝐧. 𝐎𝐮𝐫 𝐇𝐑 𝐭𝐞𝐚𝐦 𝐡𝐚𝐬 𝐝𝐨𝐧𝐞 𝐭𝐫𝐞𝐦𝐞𝐧𝐝𝐨𝐮𝐬 𝐰𝐨𝐫𝐤 𝐚𝐜𝐪𝐮𝐢𝐫𝐢𝐧𝐠, 𝐡𝐨𝐥𝐝𝐢𝐧𝐠, 𝐚𝐧𝐝 𝐦𝐨𝐭𝐢𝐯𝐚𝐭𝐢𝐧𝐠 𝐩𝐞𝐨𝐩𝐥𝐞, 𝐥𝐞𝐭’𝐬 𝐧𝐨𝐭 𝐝𝐢𝐦𝐢𝐧𝐢𝐬𝐡 𝐭𝐡𝐚𝐭; 𝐛𝐮𝐭 𝐰𝐞 𝐝𝐨 𝐡𝐚𝐯𝐞 𝐚 𝐥𝐨𝐭 𝐨𝐟 𝐜𝐨𝐦𝐩𝐞𝐭𝐢𝐭𝐢𝐨𝐧 𝐭𝐨 𝐠𝐞𝐭 𝐭𝐡𝐞 𝐫𝐢𝐠𝐡𝐭 𝐩𝐞𝐫𝐬𝐨𝐧.” [1]

This leads to the question, is strategic HR planning the missing piece in your 2025 business strategy? Let us explore why strategic HR planning is crucial for business success.

The Business Case for Strategic HR Planning

Strategic HR Planning ensures that HR goals are aligned with the business goals by formulating and implementing processes, policies and practices which will contribute to the company achieving strategic goals. It is a proactively managed process which involves anticipating the supply and demand of labour and ensuring that an organisation has the right people in the right place at the right time to fulfil its business objectives. For example, if one of the strategic goals of the business is to increase revenue by 20%, there are some important HR-related questions which should be raised which will help to craft the strategic HR plan:

· Will we need to hire additional people to accomplish this goal?

· Does our current team have the necessary skills to drive and support this growth?

· If our current team doesn’t have the necessary skills, how long will it take to get them ready?

· Will we address skills gaps by training or hiring?

· Do we need to revise our incentive programs to align with growth targets?

· What is the projected HR budget needed to support growth?

This list is by no means exhaustive. However, based on observation there are a few challenges which impact the ability to begin answering these questions and properly strategizing. Key challenges in HR strategic planning include:

· Lack of data analytics capabilities

· Lack of data (this may be a fallacy because data is all around, it is just not being managed)

· Ineffective use of company data

· No performance management processes

· Insufficient strategic questioning

The Cost of Reactive versus Strategic HR

Unfortunately, there is a huge explicit and implicit cost when we operate from a place of reactivity versus proactivity. It is important to understand the costs associated with not having a proper HR strategy in place.

Reactive hiring can lead to turnover, productivity loss, replacement costs, legal risks and poor culture fit as crucial steps in the recruitment, selection and onboarding processes are missed. This can lead to persons being hired for technical skills without considering soft skills or if we are being honest hired out of sheer desperation. In contrast, strategic hiring invests the time and resources which facilitates making better decisions which leads to improved quality of hire (longer tenure, higher performance ratings, faster time to competency), productivity gains and culture fit advantages. It is often said that a goal without a plan is a wish. If your strategic plan doesn’t take into consideration an HR plan, your strategic goals may very well be tantamount to wishful thinking.

From Analytics to Action: A Personal Perspective

Before I share a practical guide to developing an HR Plan, let me share a personal perspective based on my experience with performance management analytics. Theory is valuable, but real-world application brings these concepts to life.

Prior to venturing into entrepreneurship, I led the Metrics and Measurement (Analytics team) for the English Caribbean Region at Scotiabank. Two of my responsibilities included Activity Based Planning and Variable Compensation. With Activity Based Planning I would convert the profit plan into sales targets at the country, branch and individual levels taking into consideration the historical performance and activities needed to ensure sales would be met. This is a quantitative activity; however, my brain also works in qualitative asking ‘why’. I realized that my educational background in Human Resource Development allowed me to see things beyond the financial perspective and ask ‘non-traditional’ questions. This is why the concept of a HR Business Partner exists as that individual should understand the business and serve as a critical link between the business and HR. They should then garner support from the HR specialists in the Centre of Excellence to get specific insights which will aid them in crafting a value-added HR plan. If we do not have that model, then as we think about our strategic HR plan, we should explore how we can invest in developing our HR practitioners to support the C-suite with strategy.

With this context in mind, let’s break down how you can develop and implement your own strategic HR plan.

Making it Happen: Practical Guide

Step 1: Analyse Organizational Strategy

Key Question: What workforce do we need to achieve our business goals?

Key Activities:

• Review business plans and objectives
• Analyze current workforce metrics
• Identify growth areas and challenges

Practical Example:

· Company Goal: Increase annual revenue by 15% (from $100M to $115M)

· Current Setup: 8 salespeople generating on average $12.5M each annually

Step 2: Develop Supporting HR Strategies

Key Question: How can we best support these goals with our current resources?

Practical Example:

Scenario: Limited budget for new hires

Solution:

• Introduce variable compensation (e.g., 70% base + 30% commission)
• Set clear monthly targets ($1.25M per salesperson per month)
• Implement monthly performance reviews
• Provide sales training to the existing team
• Provide training on coaching and performance management to supervisors

Workforce Planning Model [3]

Step 3: Forecast Labor Demand

Key Question: What specific numbers do we need to hit our targets?

Key Activities:

• Analyze productivity metrics
• Project future workforce needs
• Develop multiple scenarios
• Calculate resource requirements

Practical Example: Let’s analyse our sales productivity:

Current State:

• Sales (2024): $100M
• Employees: 8
• Productivity per employee: $12,500

Target State (2025):

• Target Sales: $115M
• Option A: Same headcount (8)
• Required productivity: $14,375 per employee (+15%)
• Option B: Increase headcount
• At current productivity: Need 10 employees (+2)

Step 4: Analyse Labor Supply

Key Question: What talent resources do we have available (internal and external)?

Key Activities:

• Internal talent assessment
• Market analysis
• Gap analysis
• Budget impact assessment

Practical Example:

Internal Supply Analysis:

• Current sales team: 8 people
• High performers ready for increased targets: 5
• Employees in other departments with sales experience: 3
• Upcoming retirements/known departures: 1

External Supply Analysis:

• Local job market: 200+ sales professionals within a 50-mile radius
• Average market salary: $80K base + commission
• Competitor layoffs creating talent pool: No
• Time to hire (historical): 45 days

Gap Analysis:

• Need: 2 additional salespeople
• Internal options: 3 potential transfers
• Training needed: 4-week sales certification
• Budget impact: $160K + commission structure

Internal and External Labour Markets [3]

Step 5: Develop Action Plans

Key Question: What specific steps will we take to meet our workforce needs?

Practical Example:

Short-term Actions (0–3 months):

1. Implement New Commission Structure
2. Internal Mobility Program

Mid-term Actions (3–6 months):

1. Sales training for sales officers and supervisors
2. Implement a performance management process

Long-term Actions (6–12 months):

1. Determine if external recruitment is needed

2. Develop a talent pool

3. Track success using metrics

Talent Management Options [4]

While this framework provides a solid foundation, it is important to remind you not to be bogged solely by numbers but to examine other factors that may impact HR strategies.

Looking Ahead: Key Areas Your HR Strategy Must Address

Scanning the internal and external environment of the organization is critical to garner an understanding of the key issues which may impact the business. Only then can the appropriate strategies be formulated. One of the realities that companies will face is that the world of work as they know it is changing. Some of these changes include:

· Competition for labour no longer being local but global as individuals explore remote work and international opportunities.

· The evolving expectations of employees influence the psychological contract. The term psychological contract refers to “the often-unspoken set of expectations and assumptions that two parties (employees and the organisation, its leaders and managers) have of each other about things like how they will behave and act.” [2]

· The multi-generational workforce with different values and attitudes influencing their approach to work.

· Non-traditional work options appear attractive to young people.

· Technology is advancing rapidly which means there are emerging skills requirements e.g. how to prompt using AI as well as a deeper desire for critical thinking and analytical skills (higher-order skills)

Conclusion

Do not let strategic HR Planning be a missing piece in your 2025 business strategy. The fierce competition for talent may not be reduced anytime soon. I predict that it will only get worse. It is not business as usual. If you fail to plan, you plan to fail. Remember: Strategic HR planning ensures you have the right people, with the right skills, in the right places, at the right time. Being deliberate about the approach to talent management by designing an HR Plan will be one of the main contributing factors to a firm’s success.

As you prepare for your 2025 strategy sessions, ask yourself: Is your HR strategy robust enough to support your business goals? The time to act is now.

References

1. Bennett, Karena. 2024. “Fierce fight for talent: Tight labour market sparks rise in job hopping and staff poaching”. Jamaica Observer, October 20. https://www.jamaicaobserver.com/2024/10/20/fierce-fight-talent/.

2. Psychological contract: What they are and why they are critical. https://oxford-review.com/oxford-review-encyclopaedia-terms/psychological-contract/

3. Dessler, G. (2017). Human Resource Management (15th ed.). New Jersey: Pearson/Prentice Hall.

4. Diez, Fermin, et al. Fundamentals of HR Analytics: A Manual on Becoming HR Analytical, Emerald Publishing Limited, 2019.

Yolande Hylton is the Managing Director of Hylton Insights, an HR Consultancy Firm with a mandate to guide businesses from the transactional to the transformational HR realm, thereby enhancing individual and organizational performance. For inquiries or to learn more, you can reach out to yolande@hyltoninsights.com or visit www.hyltoninsights.com